Joint property ownership
We are often asked to advise on whether to transfer a property from the name of one spouse into joint names, but much depends on your circumstances and what you are trying to achieve. Below are some examples of when it has been helpful to own a property jointly.
Case study 1 – Protecting assets from care home fees
The main asset of many married couples is their home and they want to ensure that as much of it as possible passes to their children and are concerned that if they go into care, the home would be sold and the proceeds used to pay care fees. It is possible to use trusts within Wills to protect the deceased spouse’s half share of the property without it being a deliberate deprivation of assets.
Case study 2 – Residence Nil Rate Band
For Inheritance Tax purposes, if the combined estate of the married couple is over the available Nil Rate Bands, it is possible to claim further Residence Nil Rate Bands but one of the requirements is that the person must have lived in the home during their ownership and therefore acquiring the property when the non-owning spouse is already in care would not qualify as “owning and occupying”. In these circumstances, it could be useful to transfer half to the other spouse so that it would form part of their estate on death.
Case study 3 – Additional Nil Rate Bands from previous marriages
In some cases, individuals have been married previously and their spouse died leaving everything to them so further transferable tax bands are available for Inheritance Tax purposes over and above the standard two for a married couple but each spouse must have sufficient assets in their own estate to be able to utilise those extra allowances.
Joint tenants or tenants in common?
When dealing with property, the terms “beneficial joint tenants” and “tenants in common” are frequently used. Beneficial joint tenants means that on death, the deceased’s share will pass automatically to the surviving owners irrespective of what their Will says. Tenants in common means that each person owns a distinct share (e.g. 50:50 or 75:25) which is capable of passing by Will and this is the type of ownership most often used for estate planning.