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Joint house purchase

including wills and probate
morestout
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Joint house purchase

#485919

Postby morestout » March 11th, 2022, 6:46 pm

My partner and I are both in our late 60’s and have each lost our long term wife or husband in the last few years. We want to buy a house together and will each put in 50% but after the first death we would like the surviving partner to have the option to live there for as long as they want. If the remaining partner continues to live there, upon their death we want 50% of the proceeds on sale to be distributed in line with the will of the partner who died first. If the surviving partner decides to sell after the first death we would like him or her to have the option to either a) sell the property and return 50% of the proceeds to the beneficiaries of the dead partner or b) if he/she purchasing a new property, prohibited the return of a figure as high as 50% of the original sale proceeds , then in this case 50% of the surplus proceeds would be returned immediately with the beneficiaries taking an equity stake in the new property equal to the ‘unpaid’ debt ie 50% of sale proceeds less the 50% of residual cash that has already been paid.
Does this make sense and could it be easily documented?
many thanks

AF62
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Re: Joint house purchase

#485922

Postby AF62 » March 11th, 2022, 7:19 pm

I doubt it is anything a solicitor couldn't sort for you, but one aspect you seem to have overlooked is the potential for care home fees.

Whilst both of you are alive, if one needs a care home and the other still resides in the house the house is disregarded as assets. However if one of you has died whilst the other needs care then the property is taken into account, and in your proposed scenario the whole house is owned by that person with a mechanism to distribute 50% of the property proceeds after their death.

Therefore the ownership of the property after the first death would need to be carefully considered otherwise the "upon their death we want 50% of the proceeds on sale to be distributed in line with the will of the partner who died first" may not work as the whole of the property value might have already been consumed with care fees.

So as before - I suggest proper legal advice and not any sort of DIY or 'cheap off the internet' approach.

Dod101
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Re: Joint house purchase

#485939

Postby Dod101 » March 11th, 2022, 8:39 pm

I think that AF22 has it covered. In a not dissimilar situation, I completely understand the wishes of the OP but I also think that proper legal advice is essential. Just spend som money on getting it right!

Dod

unperplex
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Re: Joint house purchase

#486122

Postby unperplex » March 12th, 2022, 4:03 pm

I agree that you should take proper legal advice.
However one, fairly simple,provision you might consider is buying the property as tenants in common in equal shares.
(I am assuming the property is in England/Wales. Scottish land law is significantly different in many ways and may differ in this area).
Most non-lawyers tend to regard joint tenancy as the only way to hold (real) property “together”, but it is not.
With a joint tenancy, the interest of the deceased joint owner passes automatically to the survivor (NB:despite anything their will may say to the contrary - this is an area of the law that is often overlooked, especially in the case of “second marriage/relationship “ scenarios, where each partner may have different ideas about what should happen to “their wealth” on their death. The (brief) joint tenancy declaration in the Transfer document operates effectively as a stand-alone trust of the sale proceeds of the property.)
If you buy the property as tenants in common however, the deceased’s share (which can be declared as any percentage which has been agreed, but is commonly 50%) does not automatically pass to the survivor but passes according to the will/Intestacy of the deceased.Tenancy in common is also briefly declared in the Transfer document and is noted in the Land Register by providing that the survivor cannot give a valid receipt for capital monies arising on a sale.
What this means in effect is that the survivor cannot validly sell the property without the involvement (and therefore consent) of the Personal Representative(s) of the deceased.
A letter signed by both partners could be made providing that the PR(s) of the deceased would only press for a sale of the property if the survivor consented.
I hope this is helpful.

Lootman
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Re: Joint house purchase

#486124

Postby Lootman » March 12th, 2022, 4:17 pm

unperplex wrote:If you buy the property as tenants in common however, the deceased’s share (which can be declared as any percentage which has been agreed, but is commonly 50%) does not automatically pass to the survivor but passes according to the will/Intestacy of the deceased.Tenancy in common is also briefly declared in the Transfer document and is noted in the Land Register by providing that the survivor cannot give a valid receipt for capital monies arising on a sale.

If you wish for the ownership to be other then 50/50 (or otherwise equal shares for where there are more than 2 owners) then you have to use a TIC form of ownership, since joint tenancy ownership assumes equal shares. There was one time I wished to own a property 2/3:1/3 with the other owner, and so a joint tenancy could not achieve that.

If it is 2 people and a joint tenancy then it may be possible to avoid probate upon the death of the first owner. But with TIC ownership you are almost definitely going to have to go through probate when that might not otherwise have been required.

Another option is to give a third party some type of charge, lien or deed against the property, up to a certain value. This is similar to what a lender does for their protection. When I did this it was called a Declaration of Trust and it entitled me to the first £200,000 of proceeds from any future sale of the subject property.

https://www.elitelawsolicitors.co.uk/de ... agree%20to

unperplex
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Re: Joint house purchase

#486131

Postby unperplex » March 12th, 2022, 4:43 pm

1. Technically speaking, it is not accurate to say that joint tenancy assumes 50/50 shares.A joint tenancy gives each party an “undivided share” in the property. “Shares” in the sense I think meant by Lootman, can only be created by using a tenancy in common.

2. The necessity of obtaining probate is stated (inpliedly)as if it were a great burden, to be avoided if possible. I do not consider this to be so.It us relatively easy to obtain a Grant.Also the Original Poster (I think) implied that each partner would be making a will, thereby implying that Probate would (probably) be involved in any event.

Lootman
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Re: Joint house purchase

#486139

Postby Lootman » March 12th, 2022, 5:14 pm

unperplex wrote:1. Technically speaking, it is not accurate to say that joint tenancy assumes 50/50 shares. A joint tenancy gives each party an “undivided share” in the property. “Shares” in the sense I think meant by Lootman, can only be created by using a tenancy in common.

it's more accurate to say that a joint tenancy implies equal shares. For 2 owners that means 50/50 but there could be three, four or more owners. This might be important if you later want to change to a TIC structure because that can be done unilaterally by any individual tenant, but the equal shares would be maintained.

My point was that if you want unequal shares, either now or possibly in the future, then you have to use a TIC structure. Although you can finesse the ownership shares by using a declaration of trust, by mutual agreement of the tenants.

unperplex wrote:2. The necessity of obtaining probate is stated (inpliedly)as if it were a great burden, to be avoided if possible. I do not consider this to be so.It us relatively easy to obtain a Grant. Also the Original Poster (I think) implied that each partner would be making a will, thereby implying that Probate would (probably) be involved in any event.

My own view is that it is desirable to avoid probate if that is at all possible. Probate can take a few months even if it is a simple case. There is always a risk that something may arise that complicates things. And there are costs involved such as the probate office fees and for any professional help that is needed. Plus it causes the Will to be made public which some people would prefer not to happen.

The existence of a Will does not by itself imply that probate is required. So for example in a case where all assets of the deceased were held as joint tenants with a beneficiary then the Will, and therefore probate, would be moot and could be ignored.

modellingman
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Re: Joint house purchase

#486167

Postby modellingman » March 12th, 2022, 8:22 pm

morestout wrote:My partner and I are both in our late 60’s and have each lost our long term wife or husband in the last few years. We want to buy a house together and will each put in 50% but after the first death we would like the surviving partner to have the option to live there for as long as they want. If the remaining partner continues to live there, upon their death we want 50% of the proceeds on sale to be distributed in line with the will of the partner who died first. If the surviving partner decides to sell after the first death we would like him or her to have the option to either a) sell the property and return 50% of the proceeds to the beneficiaries of the dead partner or b) if he/she purchasing a new property, prohibited the return of a figure as high as 50% of the original sale proceeds , then in this case 50% of the surplus proceeds would be returned immediately with the beneficiaries taking an equity stake in the new property equal to the ‘unpaid’ debt ie 50% of sale proceeds less the 50% of residual cash that has already been paid.
Does this make sense and could it be easily documented?
many thanks


I think that what you may be after is a life interest trust. Searching this term online threw up this as the first link: https://helpandadvice.co.uk/life-interest-trust. It may possibly provide a useful starting point from an understanding perspective.

AF62 wrote:I doubt it is anything a solicitor couldn't sort for you, but one aspect you seem to have overlooked is the potential for care home fees.

Whilst both of you are alive, if one needs a care home and the other still resides in the house the house is disregarded as assets. However if one of you has died whilst the other needs care then the property is taken into account, and in your proposed scenario the whole house is owned by that person with a mechanism to distribute 50% of the property proceeds after their death.

Therefore the ownership of the property after the first death would need to be carefully considered otherwise the "upon their death we want 50% of the proceeds on sale to be distributed in line with the will of the partner who died first" may not work as the whole of the property value might have already been consumed with care fees.

So as before - I suggest proper legal advice and not any sort of DIY or 'cheap off the internet' approach.


This is a useful warning but under current rules will depend on whether the arrangement is deemed by the local authority to be deprivation of the surviving partner's assets. Unlike in the OP's case, this might happen where the partners are parents of the same children and those children are beneficiaries under both wills. It may also happen when the surviving partner is in failing health at the time the arrangement was made.

As far as I can see, after death of the first partner, the life interest trust splits the property ownership between the trust and the surviving partner so it is not necessarily the case that the surviving partner will own the whole property,

I fully endorse the suggestion about getting sound legal advice.

Hopefully, someone who properly knows about these things will be along shortly.

unperplex
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Re: Joint house purchase

#486384

Postby unperplex » March 13th, 2022, 11:19 pm

I note what you say, Lootman, but, to return to what the original poster seems to want (ie:” If the surviving partner continues living there, on their death we want 50% of the proceeds of sale to be distributed in accordance with the will of the partner who died first”).

I do not think this can be achieved unless the property is purchased as tenants in common. If it is purchased as joint tenants, then the whole of the property will go to the surviving partner, irrespective of what the deceased’s will may say.

Of course the surviving partner can agree to give the “50%” inline with what the deceased wanted, but if all is to be agreed, there would seem to be no need for “documentation” as proposed at all.
Human nature being what it is, some sort of documentation would seem necessary to avoid “misunderstandings”…..


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