• Property Protection Trust

    Severance of Joint Tenancy

    Severance of Joint Tenancy

    If you own a property that is in your sole name there are no restrictions on who you may leave it to. However, if you are not the sole owner, you may not be able to leave the property to whomever you wish.

     

    If the property is not solely owned, it may be held either as 'joint tenants' or as 'tenants in common'. If it is held jointly, on death the property will automatically pass to the other joint owner, and will not form part of your estate.

     

    Most properties are bought and held as joint tenants, but this can be or become inappropriate, and it becomes necessary to sever, or to split, the joint tenancy, and to hold the house as tenants in common.

     

    It is possible to convert property held as joint tenants to tenants in common. This may be done in a number of ways, but the most common method is to serve a notice of severance.

     

    The notice of severance must be served during your life to be effective. When the severance of the joint ownership has been completed the interests in the house are then held in separate, distinct, shares, which can, for example be left by Will. If the property is registered at the Land Registry, you need to register the change with the Land Registry. To do so, you'll need to apply for a Form A restriction.

    Property Protection Trust

    A Property Protection Trust Will is designed to help protect your property from an assessment to long term care fees or from a new spouse/partner inheriting it should your spouse remarry after your death.

     

    The key to the working of the Protective Property Trust is the way in which you own your property. If, like many couples, you own your property as joint tenants, when one of you dies, the property automatically passes to the survivor regardless of any provision that the deceased partner has made in their Will. In these cases, if the survivor then has to go into care, the whole of the property may have to be sold to pay for care fees.

     

    If ownership of the property is changed from “joint tenants” to a “tenancy in common” (by a Deed of Severance), each partner then owns a share of the house (for example 50%) which they can leave to whom they like in a Will.

     

    On the death of the first partner, the deceased partner’s share of the house is left (under the terms of the Protective Property Trust) to named beneficiaries (for example, children). At the same time the terms of the Trust allow the surviving partner to continue living in the house rent free for the rest of their life.

     

    Should your spouse/partner remarry after your death, this could have a dramatic effect on where your property ends up. This is because the act of remarriage cancels any Will your partner made whilst you were both alive and the new husband or wife or partner would then become perhaps a beneficiary of the Will. Your children for example, would be no legal relative to this person and your estate could pass outside the family to someone you have never even met. However, if you have Property Trust Wills, once again your half of the house is protected by the trust and will not pass outside your immediate family.

     

    If the surviving partner then has to go into care, the deceased partner’s share of the house cannot be assessed for care fees as it does not belong to the surviving partner (it belongs to the Trust). Although the Local Authority could make a claim against the surviving partner’s half share, a market valuation may result in a “nil valuation” meaning that the Local Authority would disregard the whole property when assessing liability for care costs.

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