For a low-cost, fixed fee of just £9.99 we can supply you with the forms and information require in order to Sever the Tenancy of your property so as to convert to what is typically referred to as Tenants in Common.
This pack contains the Mutual Notice of Severance form and the relevant Land Registry form with instructions how to complete the change to tenants in common.
If you are unsure how to deal with this process yourself IWC can arrange for couples to convert to tenants in common. This is advantageous in estate planning for many reasons, enabling you to protect your assets. It can reduce inheritance tax liability and prevent the family home being sold to pay for care home costs.
Generally most people first hear of tenants in common or severance of tenancy when they make a will, it basically means that the ownership of your home is changed from joint names to being tenants in common, referred to as severing the tenancy. It is done by preparing a simple legal document and informing the land registry. If you own a home jointly, both of you own the whole property. When one spouse dies, the other automatically becomes the sole owner. Whereas a tenant in common, each owns a separate share of the property. There are several advantages to doing so, here`s just two:
By separating your assets from your spouses and converting to tenants in common, you can shield at least half of your estate from potential care home fees. If your spouse were to inherit all your assets then needed long term residential care, the local authorities would perform a means test. If the assets totalled more than £23,000 (including the family home), your spouse would be eligible for all care costs. Fees of between £20,000-£50,000 per year will mean the estate will rapidly deplete and your children could inherit nothing. Authorities can even force the sale of the family home to cover costs. You can further reduce the risk of this happening by setting up trusts as they are not included in means tests. You may even want to consider putting your property into a trust. To do this you`ll need to Sever the tenancy and become tenants in common.
Spouses are exempt from inheritance tax when they inherit their partner`s estate. However, when the second partner dies, those who inherit may be liable. By splitting the couples assets, the half belonging to the first partner to die can be passed straight to the beneficiaries, if it`s below the nil rate band, no IHT will be due. For further protection, this share could be transferred to a trust, where the surviving spouse has a lifetime interest. Similarly, upon the death of the surviving partner, the beneficiaries will inherit half which may again be below the IHT threshold.
If you`d like to convert to tenants in common and sever the tenancy of your property, call IWC free on 0800 612 6105 for friendly, professional advice. We specialise in estate planning and management and offer a range of services to help protect your assets, including the creation of a family protection trust or protective property trust.
Co-Habiting Couples and sever the tenancy
Co-habiting couples often purchase a property as joint tenants, sometimes converting to tenants on common is preferred. This means if either of them were to pass away their share of the property would become part of their own estate and thus could be passed to their own family. A declaration of trust tenants in common is used in the event that they decide to separate at a later date. This is a legal document detailing the asset split in the event that the relationship does break down.