Tenants in common

A question about : Tenants in common

Hi, a friend of mine has been advised to put her and her husband's house in Tenants in common, rather than joint names, this has been done with a Solicitor.

Apparently if one of you has to go in a home then they can only take half of the house when the time comes after you have both passed on, rather than the whole amount if it is necessary.

Has anybody done this? Also is it true that if you have dementia or Alzheimers etc, that you are not charged anything in a home of your choice.

Thank you, oap

Best answers:

• Hi OAP,
  Financial advisers, will writers, solicitors, and tax specialists continually look to find ways to reduce tax, and protect assets. The two most common forms of 'attacker' are HM Customs and Revenue - who want inheritance tax, and Social Services - who want your estate to fund long term care costs.
  It is important to appreciate that this is an ongoing battle; minds far greater than mine find loop holes within existing legislation and use these to defend property from these attacks; when the trickle of money escaping by these routes turns into a river (or in certain cases a stream) the outlet is blocked by the authorities. So, firstly what works today, may not work tomorrow.
  The next point I wish to make is that yes, there are effective ways at the moment to protect your property from being forcibly sold to fund long-term care. But before you rush off and follow them you also need to be aware of the risks of so doing. Many surviving spouses have found themselves far worse off (and, being sceptical, their adviser far richer) as a result of including complicated trusts within their wills.
  Many people fear their house being sold to fund long-term care (LTC). But as your post indicates you can only protect 50% of the property - not 100%. If we assume your property value is Ј300,000, then you can (possibly) protect Ј150,000. But if LTC costs say Ј25,000 p.a. that means that your surviving spouse will have to be in LTC for 6 years before they start to even look at the second half of the property. Some people do go into LTC for longer than this, but for the vast, vast majority of people a much, much shorter time frame is evidenced. In the meantime your surviving spouse, who may never even need LTC, will have lost control of their house (because half of it will be in trust), and may well find undue pressure being put upon them by their family members (the trustees).
  Finally, be aware that Social Servicies can under the 'care in the community' legislation challenge why such evasive action was taken. What they are looking for is to prove you were trying to deliberatly deprive the nation of funding for long term care. If they win, your family may be asked to fund the surviving spouse's care costs. And if you are already showing signs of dementia (or other debilitating diseases) you have probably left it too late to take this action anyway.
  Changing the property tenancy from 'joint tenants' to 'tenants in common' is only a part of the process required. Your wills will need to be updated - and as they will include specific trusts you will probably have to pay several hundreds of pounds for these. You should also consider making 'enduring powers of Attorney' at the same time.
  The funding of care is complex. Certain parts are paid for by the State; others the State expects you to pay. Confusion exists (or at least we assume its confusion rather than deliberate errors) in the NHS/Social services departments as we hear of some people benefiting from State support, whilst others do not - but both have the same symptons and level of care requirements. However I have not heard of any special arrangements for people with dementia.
  My recommendation:
  1. Search and read this site; I have answered a number of related posts in recent weeks (and I have only been responding for a couple of weeks) so I guess there is a large amount of information already available on this site).
  2. Seek specialist advice.
  3. Ensure you know the risks, as well of the benefits.
  4. Make the decision as to whether its right for you, or not. (Many of my clients decide not to proceed on hearing of the risks.)
• Hi Rod
  You have put this so very clearly. It's true that this type of question gets asked over and over again on Martin's site, also on other sites like the AgeConcern and HelptheAged discussion boards. There are an awful lot of misconceptions around, a lot of what you might term 'urban myths' or pub talk. People use phrases like 'protecting an inheritance', 'protecting property from being used to pay for care'. In some cases the people concerned are a very long way from needing to consider such a possibility, you hear 'my parents are in early 60s, fit and active, but they may need long-term care paid for'. Well, that may be 20+ years ahead, and who knows what the world will look like then, what possibilities will exist and what will not.
  For myself and DH, I could not contemplate any of those complicated and convoluted 'trusts'. There are risks, as you outline. I'm in my second marriage, DH is in his third. We both have other families. The title to our property is in joint names and that's how it will stay.
  Margaret
• We have just done this with some property we own (not our home). We did it so that each of us could use up our inheritance tax threshold. The reason we did not do it on our home was a) because we did not need to as we own other property and b) because neither of us wanted scheming family to be trying to put us out of our own home in the years to come. It is all very well thinking your children would never do such a thing but you never know. Our children our welcome to anything we leave but we will not inconvenience ourselves financially or mentally/emotionally in the meantime.
• Margaret is not the only sensible one. My dh of 37 years and I are also joint tenants. Margaret is a very astute lady and so am I, in fact I successfully manage my DHs pension in a sipp. Our affairs are straightforward
  If (when) my DH or I dies then the other will decide what to do with the estate. Not our children or some executor. If he wants to travel the world then so be it. If I want to give chunks away to our children, or to a charity, then so be it
  We all have the 7 year option and personally we have the ability to downsize to release capital to do with as we wish as individuals
  If by some mis-chance we die together then there will be ample left for the family after iht and to be honest we won`t care about the tax. If we live to a very old age then we can opt for platinum star nursing homes using our joint assets for us, ourselves
• Thanks for the nice words, Kittie, and I completely agree with you.
  What DH and I both think is that if/when one of us is left here on his/her own the survivor will not want to carry on living here. It's not a matter of 'downsizing' - you can't 'downsize' much from a 2-bedroom bungalow - but the memories would be just too painful. We haven't been together as long as you, Kittie, but perhaps because it's 'second time around but not second-best' we enjoy each other's company, we love being together, we do things together. I'm probably not going to be well enough to go on our long-planned trip to Niagara in July - awaiting pelvic floor surgery - but although the people over the pond are more his friends than mine, he flatly refuses to go alone. He has no interest in going anywhere without me. But as Kittie says, WE decide, or the survivor decides, not some executor, not our children, not some trustees. What the survivor would be likely to do would be to sell up and rent somewhere and as Kittie says, use the money for whatever we like at the time.
  Margaret
• Margaret and Kittie, I totally respect your point of view and believe that it is (and should remain) totally your decision as to what to do with your assetts.
  However, there are also people around who WANT their children to have an inheritance. We have one son, he is not ever likely to have his own property for various reasons, it is a great worry to us that he may one day lose his home (our house in the UK).
  Therefore we are seriously thinking of putting the house as tenants-in-common precisely so that we can protect his inheritance as much as we are able. We understand the downsides of it.
  We are not people who scrimp and save just to leave an inheritance, in fact we will almost certainly spend much of our money travelling (including, in the future, the proceeds of the sale of our Spanish house). The only assett we are worried about is our UK house which is also our son's home.
  There are other options, but the tenants-in-common one seems best for all of us. This is why we are seriously considering it.
  Any/all input gratefully received.
• [QUOTE=oap;5181170]Hi, a friend of mine has been advised to put her and her husband's house in Tenants in common, rather than joint names, this has been done with a Solicitor.
  Apparently if one of you has to go in a home then they can only take half of the house when the time comes after you have both passed on, rather than the whole amount if it is necessary.
  That's correct
  Has anybody done this?
  Yes, I helped my parents to do it
  Also is it true that if you have dementia or Alzheimers etc, that you are not charged anything in a home of your choice.
  No, that's not true in England and Wales
  Thank you, oap[/QUOTE
  Hope this helps.
• Rodders, I'd just like to make the point that whilst sm*art*rse financial advisors and legal eagles are finding loopholes so people won't have to pay for their care, amongst the people who will be forced to pay for it through local and national taxation are pensioners.
• Well I had no idea I would start such a discussion but thank you very much for all the input.
  As it happens, my friend's husband has Alzheimers now and he is 84 and she is 80 this Thursday, she is fairly fit, and is looking after him at home and as he is doubly incontinent, I do not know how she does it, she is in Manchester area. She says a lot of the homes are closing down,and apartments going in their place, and anyway she will soldier on as long as she can cope, but it is very very hard.
  We are 71 and 76, and hearing of this tenants in common, we were wondering whether to do the same, no mortgage now of course and on a low income but too much to get any benefits, and some money in the bank.
  Yes we have one son, he told us long ago he did not expect anything from us,and we trust him completely, however, we most certainly do want to make sure he gets our house or part of it if at all possible, when I was working as well as his dad he went to his Nans during the school hols and after school, Had I not worked, we would not be here now as we were able to buy a better house etc., and worked very hard which enabled us to move from Manchester to North Wales,when my husband was made redundant. So we feel our son should share in this as he was not at home as much as we would have liked.
  I daresay this will cause an uprising on this thread, but like you say we all please ourselves.
  However, we have food for thought now, and had not realised that tenants in common was a form of trust. We had thought of going to a financial adviser but never have done in the past and coped very well sorting ourselves out. We do not really know who to go to and whether we can trust them to give the correct advice. We will have a look around the other threads and see what others have to say.
  We had thought of eventually, but not yet, as God willing we are in good health at the moment, of doing the Equity thing, but there seem to be very serious difficulties here too.That way though, you can please yourselves what you do with the money. Our house is worth about Ј280000 at present day. We had thought of downsizing, but having spent twenty one years getting our home virtually maintenance free, we do not feel like starting again. As my husband was made redundant at 53 after 30 years with his company it has been quite a struggle.
  It does make us cross though and many of our friends of our age too that we paid all our taxes, nhs contributions etc, and have to pay for our care when somebody who did not pay anything, gets the same care free. Its a wonder everybody isnt moving to Scotland!!
  Cheers and thanks again, oap
• The council will never take the house to pay for care while the spouse is still living in it.
  OAP could look at self funding any care that's needed using equity release from the home:
  https://www.sharingpensions.co.uk/ann...iate_needs.htm
  It's much better to self fund if you can as you have far more control of the choice of home, location, and standard of care.
  Whatever they say, you get what you pay for.
• the 7 year rule and other ways of giving to children
  https://www.thisismoney.co.uk/help-an...&in_page_id=90
  in our case, the 3 children are home owners on the first 2 rungs. 2 of them are really struggling, so a gift now and then is a real lifesaver. We could very well live another 40 years or more and the very idea of putting half the house value in trust for that length of time is a no no. 40 years is a long time on savings and accrued pension, unless gold star index-linked of course
  Margaret, good luck with the op. Will be thinking about you
• Will have another look at all the info you have so kindly given us.
  Some more questions for anyone on here who might be a financial adviser,
  1 What is the seven year rule exactly, what does it apply to?
  2 Can you make over your house entirely to your son ? I have had snippets of info on working lunch on BBC, and I think they have made it that you then are assumed to pay rent and they have to pay tax on it.
  3 Can you make absolutely sure that your son keeps the property and any partner or spouse cannot get their hands on it if there is a divorce or death.
  Sometimes its easier to stick ones head in the sand and do nothing!!!
  Regards and best wishes oap
• PS I do not think it makes any difference to anything but we are not tax payers as my husband was born in 1931 we still get the married mans allowance and our income falls way below what we are allowed. regards oap
• OK thanks a lot for the info, seems for now we shall have to stay as we are, and yes we get around £21k tax allowance, my only income is small amount of interest and old age pension of £52 a week, husbands is old age pension and company pension, and we are thousands less that what we are allowed.
  Its ok with hindsight, but alas none of us know how long we have got!! May be a good idea once one is around 80 and hopefully both still alive, that it goes to the equity company, well some of it, then as said before, we can do what we like with it. Best wishes and thanks again for all the help and input, oap