Tenants In Common

[wendy.h]

Hello I hope someone can help me.  My father remarried and has a will jointly with my stepmother as tenants in common.  The terms of his will are that when he dies his 50% share passes to her in full until her death, she remarries or cohabits at which time his share goes to my sister and I (or children on our death) and the other 50% goes to my stepmother or her two daughters should she die.  My concern is what happens in the meantime, can my stepmother sell the bungalow and downsize to a smaller/cheaper property or move in with one of her daughters and basically spend all the money or would there be rules under the Tenants in Common part of the will that would prevent her from doing this assuming my fathers solicitor would monitor the situation.  Another query is would the value of the estate be agreed at the time of my fathers death or at the time when my stepmother dies, remarries or cohabits.  I have never queried this with my father as it seemed too mercenery but he has been diagnosed with a terminal illness and is too ill to be discussing this issue, so my questions go unanswered, please help.

[zmudge]

As there are two or three basic ways to achieve what your father desires (all controlled by Acts of Parliament) and then variations within the basic's it is not possible to be specific without seeing your father's will. These notes are therefore just to set your thought's along the right path, nothing else. After death you will probably find that your father's share of the TIC is owned by a trust controlled by a trustee (not your stepmother) and that an executor has been nominated to distribute your father's estate. The estate will be valued and may fall for IHT - you may have to contribute if cash has not been left to cover this. Your TIC share (controlled by the trustee) will be valued again at your stepmother's death and may fall for CGT. Your stepmother may downsize and any surplus cash will be retained and invested by the trustee with the interest paid to your stepmother. She may change her mind and upsize, in which case the surplus cash can be used for this.

[zmudge]

Whilst your stepmother is alive you have absolutely no say or power in the matter and no right of entry to the property. The property will be re-registered at the Land Registry as a TIC in the names of your stepmother and the trust only. If your stepmother is taken into care the DSS can claim repayment of costs against your inheritance. You can leave your inheritance to whom you like and can borrow against it. Your stepmother can take in lodgers. If your stepmother is unable to fund maintainance of the property (or Council Tax and other outgoings relating to the property) you can put up cash, take a lien, and be paid on death of your stepmother. If you try to put an end to the trust by having your stepmother declared insane or incapable you will find this next to impossible.

[zmudge]

Your stepmother can also sell the property in which case your inheritance would be the cash that your share of the TIC brings. This will be retained and invested by the trustee with the interest being paid to your stepmother during her lifetime, the capital being available to you only after her death. Remember also that the trustee must be paid annually (usually about 1% of the value) and the executor will have charges and costs.

[wendy.h]

Hello Zmudge, thanks for your obviously extensive knowledge, I am very grateful, you have clarified much of my question certainly about the trustees and what will happen upon my stepmother's death, I am however still unsure about the extra conditions stated clearly in my father's will that should my stepmother remarry or cohabit my share of the estate would then come to me and my sister, would you be able to clarify that process and how much my dad's estate would be worth to pay IHT, I hope I'm not asking too much, many thanks.

[zmudge]

Hello, Wendy. Currently the first �275000 of an estate is free of IHT, all above this is taxed at 40%. If your stepmother marries or cohabits then the trust is brought to an end and distributed exactly as if she had died. However, frequently these things are kept very, very secret and it is difficult to know the true position. Even if she died unless you are in constant contact you may not know for a long time after - trustees, particularly if they are banks, get out of touch. I see that I did not deal with your question about stepmother moving in her daughter, and the answer is yes she can move in any number of whom she likes on whatever terms she likes. She can even run a business from the property and change the planning to some form of commercial. She can also alter and adapt the property. Please don't hesitate to post again if I can be of further help.

[wendy.h]

Hello Zmudge, thanks again for your knowledge, you have answered all my questions and put my mind at rest, thanks again.  I have a good relationship with my stepmother and her two daughters so I envisage it would be no problem keeping in touch, we also have mutual friends so unless she moved completely away from the area I would hope I would be made aware of the situation.  Thanks again you have helped with a very delicate subject, best wishes, Wendy

[erimus1]

I spent a year learing about tennants in common and joint tennants - can't be explained in a sentence i'm afraid - go and see a solicitor.

[wendy.h]

Hello Erimus1.  I am sure there is alot more to tenants in common that I could possibly know, there were just a few questions that my dad could have answered had he not been so ill, he sought legal advice and did their wills with their solicitor so I am sure it is all above board and my dad will have ensured his estate was secure, it's just one of those things that you don't ask all the in's and out's of, so I thank Zmudge for his great help and if with the information he has given me if there are any problems after the event I will of course deal with my father's solicitor. 

[maudie31]

hi me and my partner owns our house out right as tennants in common e wonts out the relationship i lived there ten year b4 we met and e bought the house im trying 2 get a morgage 2 buy him out but am struggling 2 get one if i dont agree 2 sell can e force me to sell it