Have you moved home since making your last Will?
If you have moved home since making your last Will and can answer yes to these questions below, looking at your legacy planning might be essential as there may be protection and Inheritance Tax implications.
Background
We’ve recently encountered three cases involving clients who changed residences, and the tenancy wasn’t successfully severed, resulting in significant consequences.
Joint Tenant: All joint tenants share equal rights to the entire property.
Tenants in Common: Each tenant in common may possess a different portion of the property.
Tenancy severance in the context of making a Will Tenancy Severance typically refers to converting Joint Tenancy into Tenants in Common.
In joint tenancy, when one co-owner passes away, their share automatically transfers to the surviving co-owner(s). However, through tenancy severance, an individual can specify in their Will that they want their share to be treated as a distinct, separate portion, which does not automatically transfer to the surviving co-owner(s).
By severing the tenancy, the deceased person’s share becomes part of their estate and can be distributed according to the instructions outlined in their Will. This allows for greater control and flexibility in determining the ultimate disposal of the property after the individual’s death.
Tenancy severance is a legal process, and following the specific legal requirements is essential when including such instructions in a Will.
Is your home owned in a sole name?
This often happens when clients move to a new home and register joint property ownership at the Land Registry without informing us. However, this has the consequence of the property losing protection against potential loss in case of long-term care needs or remarriage.
Another implication of moving or downsizing is that assets no longer protected by Property Trust Wills may be released.
Q1 IF MARRIED BUT NO VALID WILL AND HOME IS OWNED IN A SOLE NAME? Then there is a severe risk of Inheritance Tax being payable on first death, even for married couples.
Q2 IF NOT MARRIED AND THE HOME IS OWNED IN A SOLE NAME? Then there is a severe risk of Inheritance Tax being payable on the first death, even with a valid Will. There would also be severe concerns for the surviving partner, which can be overcome with a suitable Will.
There are conventional solutions that can satisfy all parties and potentially save significant amounts of Inheritance tax. See also Placing Your Property in Trust in a Will.
If you have moved home since making your last Will and would like more information on the above please call us to arrange a free ZOOM or telephone review on 0208 568 9602 or email us with your contact details at enquiries@willpowergroup.com.
