February 2020

Your share of the house is at risk despite you writing a Will

If you own a property with your partner or wife, it is important to know how it is being ‘owned’ at the Land Registry. Is it being held as Joint Tenants or Tenants In Common.

For instance, if you are owning the property as Joint Tenants and one of you dies, then the other person will become the owner of the property regardless of what it says in your Will.

When property is owned jointly by 2 or more people they are said to own the property either as “joint tenants” or as “tenants in common”.

How do I know whether I am a joint tenant or a tenant in common?

If you are unsure whether you own property as joint tenants or as tenants in common, if the property is registered with the Land Registry, as most properties are these days, confirmation can be obtained by obtaining “office copies” of the register from the Land Registry. If the property is held as tenants in common the office copies will contain what is known as a “Form A restriction” which reads as follows:

“No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court”.

The title documents relating to the property will also record whether the property was purchased or transferred to the co-owners as joint tenants or tenants in common. However, the manner in which the property is owned may have changed since the title documents were prepared.

For this reason it is usually necessary, in the case of registered property, to obtain clarification by obtaining office copies from the Land Registry.

What happens when one of the tenants in common dies?

Where property is owned by tenants in common each co-owner is free to leave his or her share of the property to who ever they wish when they die. If they do not make a will their share in the property will pass to their relatives in accordance with the rules of intestacy.

This is in contrast to the position relating to joint tenants where their share in the property passes automatically to the other joint tenant or tenants upon their death.

From an inheritance point of view is a tenancy in common better than a joint tenancy?

The question as to whether a tenancy in common is better than a joint tenancy, from an inheritance point of view, will depend upon the circumstances of each individual.

Unmarried couples may, for example, prefer to hold property as joint tenants to ensure that if one of the parties dies the surviving party will inherit the deceased’s share in the property.

Please contact me on [email protected] or 0207 041 6069 to find out how I can best help you protect your family and your assets.

Why writing your life insurance into a Trust will save you thousands?

Wills / Nadeem Afzal

When you are planning your family’s financial future, it is prudent to take all the necessary steps possible to protect their standard of living.

Arranging your life insurance in the right way – to give your family the maximum possible benefit – is an important consideration.

One option to consider when taking out life insurance is putting the policy into a trust.

And yet according to insurer Aegon, only 6% of life-insurance policies in the UK are set up in this way.

This is surprising as, although this process isn’t necessarily suitable for all people, it can be advantageous in the case of many.

Do bear in mind that if you want to discuss the specific advantages of putting your life insurance policy into trust, you’ll need to speak to an independent legal advisor.

What is a trust?

A trust allows you to set aside an asset to benefit a specified person or people (the beneficiaries).

The asset is managed by a trustee or trustees until such time as the beneficiary is intended to benefit.

So, for example, your spouse may look after property on behalf of your children until they reach a responsible age.

Life insurance policies are such an asset, and putting a policy into a trust can affect what happens to the payout from a policy in the event of your death.

The principal advantages to putting a life insurance policy into trust are as follows:

Trusts can help sidestep inheritance tax.

Under normal circumstances, the payout from a life insurance policy will form part of your legal estate, and may therefore be subject to inheritance tax.

By writing a life-insurance policy in trust, the proceeds from the policy can be paid directly to the beneficiaries rather than to your legal estate, and will therefore not be taken into account when inheritance tax is calculated.

This means the value of your estate may not move above the threshold, depending on your circumstances.

You don’t need probate to be granted in order for the policy to pay out.

Writing a policy in trust also means payment to your beneficiaries will probably be quicker, as the money will not go through probate.

This is a legal process which confirms an executor’s authority to deal with your possessions.

So, for example, if you leave everything to your spouse in your will, then your spouse will have to get probate granted before they can distribute your money, property and so on.

This process can take a long time, even when there is a will. In cases of intestacy (where there is no will), it can take much longer.

However, if the life insurance policy is put into trust, then it can pay out before probate is granted, as the insurance provider will just require a death certificate before paying out.

You could get greater control over your policy.

Writing life insurance in trust allows you to specify how you want the proceeds to be paid out. For example, trustees can be appointed to oversee money for the benefit of children under 18.

In addition, setting up a trust means that the payout will go to the people you intend it to.

Does it cost extra?

No. Your insurance provider should be able to provide you with this option for free when taking out the policy.

Some existing life policies can also be transferred into trust. Although if you want to write a life insurance policy in trust, we suggest you speak to an independent legal advisor first.