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Latest News

Residence Nil Rate Band (RNRB).

A new tax-free allowance was announced in the Summer Budget 2015 (the Residence Nil Rate Band) that will take effect on or after 6th April 2017.  Downsizing provisions have yet to be finalised.

There are a lot of myths and misconceptions surrounding this new allowance - please call or view our website pages (not yet updated) for further information - including:

  • everyone has a new allowance of £1M;
  • everyone can pass their home free of tax to their children

You may not get the full allowance (or double the allowance) if:

  1. your estate exceeds £2M
  2. you rent property
  3. you don't leave your property (or proceeds of sale) to the right qualifying people and in the right manner
  4. you are unmarried

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Property Tenancy in your Will

Joint Tenants and Tenants in Common - How it works

Most people know if their property is owned by just one of them, or both of them.  Most, however, do not know if the solicitor or conveyancer drew up the deeds as “Joint Tenants” or “Tenants In Common”.

As “Joint Tenants”, irrespective of what is in the Will, on death the property passes to the other Joint Tenant(s) automatically via the “law of survivorship” and not the laws of intestacy or the Will.  The last one alive gets the lot and the property then passes according to their Will or via the law of intestacy if no Will exists.

As “Tenants In Common”, the other tenants do not automatically get the deceased’s share of the property.  Their Will or the law of intestacy determines what happens to it.

Considerations for Unmarried Couples

Joint Tenancy

At simultaneous death, all joint property will pass under the “law of survivorship” from the elder tenant to the younger tenant and will then pass according to the Will or Intestacy Law of the younger tenant.  Especially with intestacy, this could result in the entire property passing to the family of the younger tenant, regardless of any contribution to the purchase or maintenance of the property that the family of the elder tenant had made.  Also, only the younger tenant’s Nil Rate Band is used against the property.

Tenancy In Common

When one of the tenants dies, their share will pass according to their Will or Intestacy Law.  Under intestacy, this could result in the surviving tenant having to sell the property or find the funds to buy back half of the property from the beneficiaries of the deceased’s estate.

Considerations for Couples

There are many scenarios where couples might not want the surviving partner to inherit.  Some include:

Inheritance Tax Mitigation –By holding the property as “Tenants In Common”, on first death half the property can be left to trust and used to mitigate inheritance tax.  Also, on simultaneous death, each half of the property will pass into the respective estates of the deceased enabling each Nil Rate Band to be used.  Click here for further information.

Property Preservation - As the major asset for most people is their property, holding property as Tenants In Common enables the property to be left to children with a lifetime use to the surviving partner – thus preventing the survivor (or their new spouse) from squandering the children’s inheritance.  Note that property preservation is not conducive to mitigating IHT as it would be considered a life interest in 2nd spouse’s estate.  Click here for further information.

Protection Against Care Costs – By holding the property as “Tenants In Common” and drafting the Will appropriately, half the value of the property can be protected from care costs, should the survivor need to go into care.  But be aware of rules on intentional deprivation.  Several solutions for the property are possible.  Click here for further information.

Estate Preservation – Some people wish to protect their entire estate because of concerns such as long term care, remarriage post first death.   With the major asset for most people being their property, holding property as Tenants In Common enables the property along with their other assets into a Flexible Life interest Trust.  Click here for further information.

Cornerstone Wills can ensure that the property ownership is set up in the most appropriate way for your requirements.