A majority of couples who used a Mortgage to buy their home or who have not received professional Estate planning advice own their home and any investment properties as Joint Tenants. This is because Mortgage lenders have always preferred to lend to couples who buy properties on a Joint Tenant basis.

 

Changing from Joint Tenants to Tenants in Common is a completely legal and painless process allowed by the Government. In legal terms it is referred to as a Severance of Tenancy, but in practical terms it does not involve a change in the ownership in the property or the percentage of the property each partner owns.

 

The change to own the property as Tenants in Common is registered with the Governement Land Registry department who charge a small fee for registration.

Owning a property as Joint Tenants is useful in that if one partner dies the other partner inherits their share of the property. However, owning a property as Joint Tenants can have several very negative financial implications.

 

Owning a property as Tenants in Common with an appropriate Will Trust in place will also mean that if one partner dies the other partner inherits their share of the property. However, owning a property as Tenants in Common can have several substantial financial benefits.

 

Owning a property as Tenants in Common is extremely important for couples who wish to make use of a Will Trust or a Wealth Preservation Family Trust to reduce their liability to pay Care Home Fee’s to the Local Authority.

 

If you or your partner is forced to go into a Care Home your Local Authority can charge the cost of staying in a Care Home (£600 - £900 per week) to the person in Care's savings. If they do not have sufficient savings, a debt repayable to the Local Authority which must be paid when your home is sold is created. Therefore, the amount of money your children inherit can be reduced dramatically. Severance of Tenancy can in a completely legal way, reduce the liability to pay Local Authority Care Home fees by up to 50%.

 

Owning a property as Tenants in Common is also extremely important for couples who wish to make use of a Will Trust or a Wealth Preservation Family Trust to reduce their beneficiaries payment of Inheritance Tax to the Government.

If the value of your and your partners Estate is sufficient, the Government can charge your children Inheritance Tax when they inherit your Estate. Inheritance Tax is currently calculated at 40%, this can reduce the amount of money your children inherit dramatically. Severance of Tenancy can in a completely legal way, reduce your childrens Inheritance Tax bill by up to 100%.

 

Owning a property as Tenants in Common also offers a significant degree of financial protection from being repossessed if you or your partner get into financial difficulty with creditors in the future.