Making a will is normally a good way to protect your assets, but it can have pitfalls. Read on for some sound advice
Most of us understand the importance of making a will—dying ‘intestate’ makes your property subject to complex inheritance laws, and if you have no relatives, it can pass to the Crown.
A more common situation is that a couple co-own their home and make ‘mirror wills’, so on the death of one, the home automatically becomes the sole property of the survivor, who can do what they want with it; but this situation carries its own problems.
For instance, if the survivor chooses to remarry, the whole of the house could pass to their new spouse on their death, bypassing any children of the first marriage. Another problem is that if the survivor has to go into a nursing or residential home, and is the sole owner of the property, the Local Authority can charge the cost of care against the value of the whole house, and again, the children are effectively disinherited.
One effective way to avoid these problems is to change the way the home is owned from Joint Owners to Tenants in Common. This is a straightforward process, and need not involve the mortgage company if the property is mortgaged.
As Tenants in Common, each owner owns one half of the property and can use their own will to do whatever they wish to with their share of the property on their death.
Their options could include leaving the property to their children, so that if the surviving spouse remarries they will only own their own half of the property, and can only give their share to their new spouse.
In this case, the Local Authority can only charge the cost of care against the half of the house that they own, so the children inherit at least half of the value of their property.
If the owner of the other half of the house does not want to sell their share, recent case law suggests that the effective value of the house could be nil, so the Local Authority may not be able to charge any care costs against the value of the property.
Other provisions, such as a Life Interest Trust, can delay the gift, preventing the surviving spouse being forced out of the home, and ensuring access to the capital if the house is sold, and a Discretionary Trust can protect income to care for an under-age, disabled, vulnerable or elderly relative.
So, if you want to protect your family property, don’t automatically assume that a ‘mirror will’ is right for you; consult a property solicitor and make sure your will works for you as well as for your family. •
Making A Medical Negligence Claim