Inheritance question.

[JKramer]

I own a house as tenants in common with my partner.
I own roughly 2 thirds of the value.
We are currently unmarried but may do so in the future.

I would like my share to ultimately to go to my sister but I do not want to make DP sell the property if he outlives me.
What are my best options?

My friend mentioned something about a trust and giving DP life interest, and something about a portability clause.
Not sure DP will not be happy with all this but you cannot guarantee what he will do with assets after you are gone, but I do not want to be in a situation that if I die first, DP inherits everything and when he dies, nothing goes to who I wanted the assets to go to.

Oh, we are not planning to have children.

Depending on the value of the property, your estate and your DP's assets, you might do better with a discretionary trust rather than a life interest trust. A life interest given in your Will will be subject to Inheritance Tax on your death and again as part of DP's estate when he dies (so potentially taxed twice). A discretionary trust will be taxed on your death but is then subject to a different Inheritance Tax regime so would not be part of your DP's estate. The position would be different if you were married due to spouse exemption.

You should see a solicitor so that they can go through the options with you.

As Domaby says, a discretionary trust may work better for you if IHT is an issue (it applies over £325k, but you can ignore death in service benefits, life insurance etc which are held under separate trusts). So if your share of the home, plus the contents, money in savings, shares, etc comes to more than £325k, IHT will apply.

If IHT isn't an issue, then a life interest trust would give your partner the right to live there until he dies (you could also specify that it ends if he marries). This would, of course, mean that your sister would have to wait for an awfully long time to receive her inheritance if your partner lives to the average age of about 79.

An alternative would be to give him a right to reside. This can be for as long as you like. So you could specify, say, 10 years, by which time he would perhaps be in a better position to rehouse himself.

Of course, if you did marry and/or have children you would need to reconsider your options.

I'm a qualified will writer and have a paid-for advert over on Classifieds/Small Business if you'd like any more info.