Joint mortgage vs tenants in common

[belfastmillie]

My dh and I (married ten years, two dc - 8 & 5) have a joint mortgage on our property. We have always been on the same page with values and finances etc and I was a sahm mum for a few years so it seemed sensible.

However recently I have been reading a lot about dc who have lost out when their mother has died and dad has remarried and left everything to new wife when he died.

Also recently we were discussing his friend who is divorced with 2 kids and has since blended families with a new woman and her 3 kids and I realised that he didnt feel the same way about this friend protecting his kids inheritance and was more of the opinion that 'its his money' and he should just enjoy it and be happy with new gf and not worry too much about wills etc.

I do not agree and should my dh die, I would not be sharing finances with any potential new man for this reason.

Sorry to cut to the chase, I am considering switching our mortgage to tenants in common and specifying a joint split with mine to be held in trust for the kids if I should die. I can't find much advice on the pros and cons of this online and my mortgage provider just cut me off after a 20 minute wait to chat to someone so I thought I would ask here?
The pro would be protecting my share of our assets for the kids as I would change the will as well. What are the cons? Are there any?
I don't relish having this convo with my dh as it will seem like I don't trust him but I want to be informed when I do.

Another pro is that should one of you require care then the other 50% would be protected.

Example: my MIL is a widow and owns 100% of her property, if she needs to go into a care home then the local authority can take 100% of that property into account when making a financial assessment.

My own mother, also widowed, only owns 50% of her property, because she was TIC with my late father. So if my mum needs care then my dad's 50% cannot be taken into account, it now belongs to my siblings and me.

One negative is if you die you dh cannot sell the house until the children come of age and agree he can sell.
Also are the children very young? If one of you died and needed to release any equity or hands on actual cash the remaining spouse cannot access funds.
We plan on changing from jt to tic once our youngest reaches 18

T-iC is not related to your mortgage, you need to change it at the land registry. You also need to make new wills Immediately reflecting the change or it will have no effect. Your solicitor can change to TIC For you at the same time as doing the wills.

Would your dc have to pay inheritance tax on the 50% share you leave to them? Is that share worth more than 320k?

Currently my half of the estate would be less than 320k but that may change in time.

Good point AndWhat is there a way to get round this at all? I want him to be able to sell and move if necessary and be able to stay in the property til he dies. This is one of the downsides I wondered about...

Thanks *kerosene20' I realise that, but really it's the will element that I am concerned about. My understanding is the it's quite easy to switch the mortgage to Tenants in common - its the impact on inheritance etc that I am worried about.

You don't change the mortgage to tenants in common. You change the way the house is owned by severing the joint tenancy. This involves serving a notice on your husband and notifying the Land Registry. Your mortgage company isn't involved at all.

You need to talk to a solicitor, not your mortgage provider.

*You don't change the mortgage to tenants in common. You change the way the house is owned by severing the joint tenancy. This involves serving a notice on your husband and notifying the Land Registry. Your mortgage company isn't involved at all.

You need to talk to a solicitor, not your mortgage provider.*

This.

Your mortgage is irrelevant to how you hold the house.

You also need to make new wills Immediately reflecting the change or it will have no effect.

That’s total rubbish.

If you don’t have a will, your estate (which your property forms part of) passes according to the rules of intestacy.

To severe a joint tenancy you just need to serve notice on the other advising that’s your intention. Ideally let the land reg know so they add a joint proprietor restriction and so there’s a record of it.

Just so JT now and if you fall out sever at the Land Reg and make a will re: your share.

Sorry, I meant just hold as JT for now...

@ZigZagPlant

You also need to make new wills Immediately reflecting the change or it will have no effect.

That’s total rubbish.

If you don’t have a will, your estate (which your property forms part of) passes according to the rules of intestacy.

Yes...straight to her husband. May as well leave it as Joint tenants if not changing the beneficiaries in the will.

Doesn’t all pass to husband if you have children- only a certain proportion of the estate.

Talk to a solicitor. A high street solicitor won’t charge you for an initial chat and a declaration of trust (needed when holding as tenants in common) will not be very expensive to set up. If you are concerned, talk to a solicitor. Randos on the internet can’t be relied upon.

Also consider any work in death benefits. You may be able to express wishes that they go to children rather than husband on your death etc.

I also had this dilemma - my assets are worth considerably more than DH and also possible inheritance from parents will be significant. the will company we used actually rang me back privately and asked to speak to me without DH. They expressed the same concerns - that I could die and DH inherit everything and then he could remarry and leave everything to his new wife who could then will everything to HER children therefore leaving my children with nothing

So......we have a tenancy in common mortgage. My will stipulates a split of assets so that DH can't argue I didn't provide for him (as lots of partners are able to contest on this basis) so he would get a chunk but the bulk of the money/assets is left to my biological children. But there is enough to pay off the mortgage - DH would be allowed to live in it mortgage free but ultimately it would be owned by the children if that's what the funds were used for.

Lots of my friends were horrified by this approach but I've read some absolute horror stories on here of children being disinherited by a stepmother

It was also a condition of my parents wills that i protect any assets left to me from their estate as much as I could

@Ditheringdooley

Doesn’t all pass to husband if you have children- only a certain proportion of the estate.

Talk to a solicitor. A high street solicitor won’t charge you for an initial chat and a declaration of trust (needed when holding as tenants in common) will not be very expensive to set up. If you are concerned, talk to a solicitor. Randos on the internet can’t be relied upon.

Also consider any work in death benefits. You may be able to express wishes that they go to children rather than husband on your death etc.

The first £270,000 goes straight to the husband. Assets after that are split between the children. So unless the house is worth over £540k then a will does need to be written at the same time.

Ok so I see your point re the will - but I meant really that how you hold the legal estate of your property is an entirely separate issue to your will. In this instance yes, it would go to spouse.

Also you only need a declaration of trust where you want to hold in unequal shares. It isn’t essential.

Lots of my friends were horrified by this approach but I've read some absolute horror stories on here of children being disinherited by a stepmother

My friends have taken similar measures. It’s interesting how people look at things. I’m confident my DH would ensure the kids are looked after and I wouldn’t want him to exclude a subsequent wife from his will should I die and he meet someone else.

Thats not relevant to the issue of this thread tho.

@ZigZagPlant

I think the issue is that people are living so so much longer these days and 2nd and 3rd marriages are common - a widowed husband might have very intention of his kids by his first marriage inheriting and is comforted by a new wife who promises the kids will be "looked after" if he dies first.......and then pops his clots, relations become strained and all of a sudden kids become disinherited

I've always followed the hope for the best plan for the worst rule in life

True - my DH has looked after his son from a prev relationship in his will. I have given him instructions re sorting out his will if he remarries after my death.

We have agreed this but I trust exh completely, (hence keeping the house in joint names even though I don't live there) so haven't bothered with the paperwork.

You need to speak to a solicitor and if you make this change, you need to have your intentions specified in a will.

It set up properly, it does not preclude you DH from selling & moving but does protect the value (rather than the specific property) for your DC in the future.

@Mumblechum0 is a will writer and MNer

Went through all these scenarios with us.

It's really worth talking it through with a professional.

https://www.marlowwills.co.uk

Thank you all for the advice, really appreciate it.
On a further note I had a chat with dh this week and he was very understanding and supportive, he thinks it's a good idea.
He thinks he is prob going to die first (although you never know) but he thinks it will protect him from pressure from any future potantial spouse and protect the kids. We're going to get some financial advice soon.