It's an inheritance one

[Calmbeforethestorm9]

I'm not going to say which party I am in this scenario, but I am one of them. Just after some opinions on the situation.

Parent A and Parent B own a home with a very small amount left to pay on the mortgage. They have 3 adult children.

Parent A has a life limiting illness and is getting their ducks in a row so to speak.
Parent B has no health issues.

Parent A wishes to place the house in a trust fund in the event of their death, equally shared 4 ways between Parent B and their 3 children. They think this will protect the asset should parent B need paid care later in life.

Parent B not sure if this is fair. They are joint tennants of the house and this arrangement would see parent B only get 25% of the house. Parent B also has concerns regarding their ability to sell the house in the future and needing the consent of the 3 children.

As far as I am aware (please excuse anything that is in correct, this is a million miles from my field) Parent A cannot choose to do anything with their half of the house without Parent Bs consent?

Is there a way for Parent A to leave their share of the house to their children? Or does the fact that Parent B outlived them mean this is not possible?

If they are joint tenants then the property automatically goes to the surviving joint owner.

The joint tenancy can be severed, in which case they would become 50/50 tenants in common, and Parent A could leave their 50% share as they wished, but Parent B would retain their 50%.

Thank you. Would both parent A and B have to give consent for the joint tenancy to be severed? If this happened could the 3 children push to sell the house without Parent B wanting to? And vice versa, could parent B opt to sell the house without the consent of the 3 children?

The joint tenancy would need to be severed and the property owned as tenants in common 50%/50% share each. Currently they both own 100% jointly.
Parent a and parent b could both draw up a will with the property interest trust leaving their 50% to the children on their death. This share would be held in trust and a life tenant clause inserted giving the remaining parent to stay in the property for the remainder of their lifetime and the children would not be able to terminate this life tenant clause.

Go to the Society of Will writers who will be able to point to in the right direction to get this set up for you.

Parent A has the right idea about putting the property into a life rent trust. As the law stands just now, it will protect the asset. Yes I know from experience

Calm - children wouldn't be able to push for sale but parent b is allowed to move, transferring the life tenancy to any subsequent property. Doesn't need the children's permission to do so.

The other party doesn't have to agree to a joint tenancy being severed, only needs 1 party to apply for it.

Severing the joint tenancy and leaving the 50% share to the children with a life interest to the surviving parent may very sensible, although the value of the house and remaining estate should be considered for IHT purposes if this route is taken.

Thank you everyone for your quick replies and knowledge!

While I am usually a fan of DIY wills, this is a good example of a situation which really does require a professional to write a will to make sure all eventualities have been covered.

There’s a whole heap of tax issues that come with Trusts. Putting money into a trust does not make it tax free!

Why doesn’t parent A want to leave the house to parent B? Are they married?

Why doesn’t parent A want to leave the house to parent B? Are they married?

One reason might be to shelter the half belonging to the first parent to die, from being used for care home fees for their spouse, so that half at least can be passed down the generations

And I suppose that if Parent A leaves everything to Parent B and (s)he remarries without making a new will afterwards, there’s a chance that the three adult children will inherit nothing, it would all go to their stepparent. Is that the case?

This sort of thing does need a solicitor and careful thought.
I appreciate that you might not want the half of the house previously belonging to one parent to end up paying for the care of the other, but as PP have said there are all sorts of details which you should know first.

(My Dad left his house to me but in trust - his long-term partner gets to stay in it for the rest of her life as long as she doesn't cohabit or marry - and his partner & I have been discovering all the unexpected results to this!).

IHT - if B's half is over the IHT limit, tax will be due on the difference, how will this be funded?

Insurance - A should make sure the kids (now co owners) are also named on the policy (if the roof blows off the day after A goes into a nursing home with dementia... Etc).

Who pays for, authorizes repairs, insurance, improvements?

What if A wants to sell up and move somewhere more suitable? Would the whole of the house value be available for that?

Can A take in lodgers or rent the house out?

What if A goes into a nursing home (a) for respite care or (b) for good?

What if A moves in a new bf/gf/spouse? If A leaves their half of the house to them do (could, even?) the kids force a sale - potentially chucking a pensioner out of their home - or do they deal with co-ownership with someone they may or may not get on with?

You need a STEP solicitor because there are a LOT of potential scenarios to cover.

The house would not get divided equally 4 ways. Parent A could leave their half to the three kids who would get 1/6 each. Parent B would retain their half. B cannot stop A from doing that and in fact it’s a sensible idea to protect A’s half of the house and ensure the kids get some inheritance. Unfortunately it won’t stop a care home getting B’s half of the house, because if B is the only one living there then the house will have to be sold and the care home will take B’s half.