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Original poster

Tenants in common unmarried vs married

12 replies

piscis · 09/11/2018 12:47

I feel a bit silly posting about this, as I should have a better understanding of the situation from the beginning...

My DP and me bought a house in July. We are not married and have a baby. DP was dealing with the whole mortgage thing, as he is quite good with admin stuff and I just hate it.

When we made a decision about being joint tenants or tenants in common, we decided that we would go for tenants in common as he put a big deposit (over £150k from selling a property abroad), so we could reflect the percentage each of us had. I was ok with this as I understand that was a huge deposit on his part and I didn't put any and I would just be contributing in the monthly repayments.

Apart from that you could specify a share on the property, I didn't know there were any other differences between the two (joint tenants or tenants in common). I stupidly assumed that if one of us died, the other would get the property automatically. I only learnt yesterday that that's not the case if you are tenants in common, at least in our case as we are not married. But what happens if you are tenants in common and are married? Does the surviving spouse inherit the other's share on the property or not?

OP posts:

randomsabreuse · 09/11/2018 12:53

Joint tenancy means the house is not part of the estate for Inheritance tax purposes. Might or might not be relevant for both married and unmarried joint owners.

In a tenancy in common the share of the house owned by the person who dies either falls under the rules of intestacy or is disposed of by will.

If he has a will you need to know what it says, and you also need to check what the intestacy rules are - at least some would go to your son on trust until old enough to hold property independently but there might be provision for parents/sisters as well. Been a while since I looked into it.

MemoryOfSleep · 09/11/2018 13:02

Does this help?

www.thisismoney.co.uk/money/news/article-1594984/Tenants-common.html

CheeseCakeSunflowers · 09/11/2018 13:02

Joint tenants means that when one dies the other automatically then owns the whole property. With tenants in common the deceased's share goes to whoever is named in the will. If there is no will then a spouse will get it up to a certain amount, then children of the deceased then other relatives. In your circumstances it is important that you both make wills.

BubblesBuddy · 09/11/2018 13:11

This is one of the problems of not being married. You have to be named in his will and you, as it stands, could be homeless if he dies. I would try and sit down and chat about this. The fact you have a child together should concentrate minds I would have thought. He’s protected his investment but not protected his child. Is this what he intended? You both should see a solicitor who could advise on wills and how the property could be left in the event of his death.

Original poster

piscis · 09/11/2018 13:46

@MemoryofSleep Thanks for the link, I have read many articles about this and still find it confusing what would happen in each scenario, married vs unmarried and with a will/without a will. I would basically like to avoid that anyone else apart from us could be inheriting a percentage of the property and I am not sure if the best thing is to get married or making wills or both

He’s protected his investment but not protected his child

@BubblesBuddy What do you mean by that? How would our DD be affected or is not being protected by us being tenants in common?
I understand that if there is no will, our DD would inherit, right?
I understand maybe I am not protected, but I fail to see how it could potentially affect DD. But maybe I am not seeing something. Honest question.

Definitely we'll need to sort it out as I am not happy with this since I found out. I am absolutely fine with him having more of the property, but not with some of the other implications of being tenants in common.

OP posts:

PilarTernera · 09/11/2018 14:02

How would our DD be affected or is not being protected by us being tenants in common?

He probably did not consider the possibility that he would die while dd is still a child. Unlikely, but not impossible. If his share of the property had to be sold to pay inheritance tax and you did not have the money to buy it, potentially you and dd could be made homeless.

BubblesBuddy · 09/11/2018 14:21

I’m sorry. What I said wasn’t quite correct. A child can inherit but would then be responsible for IHT if applicable. If you were married you would just inherit the house if that was in the will. There would be no IGT to pay. Many people see this as a big financial bonus and ensures their children still have a house to live in.

The other point is that if your partner dies intestate, your DC cannot inherit until they are 18. That means the inheritance is in a trust with appointed trustees. They could want to sell the house, or ask you for market rent. It’s not your decision to make. Who pays for maintenance? You would, in effect, be a tenant or lodger. Most people would try and avoid such difficult circumstances.

MemoryOfSleep · 09/11/2018 21:14

I'd maybe post in legal for additional info, but my understanding is that it depends on wills and property value.
If the value of his share of the house plus life insurance and pension policies in addition to any other assets is less £325,000 than you don't fall foul of inheritance tax.
If the value of his assets exceeds £325,000 and you're unmarried, then any assets above that sum will be taxed at a rate of 40%, regardless of who inherits. You may have to sell the house to pay for this. This is if he has a will.
If you were married in the same situation, you would inherit his share of the house if he willed it to you (or if he didn't write a will) without needing to pay income tax.
If you were not married and he died without a will, you would inherit nothing and the estate would be split between his children. The inheritance would still be taxed if above the value of £325,000. If the children were to inherit the home, that threshold is raised to £450,000, but I don't know if it applies in this case because the whole house wouldn't be inherited as you own some of it.

This is my understanding. I may be wrong.

wowfudge · 10/11/2018 15:05

If you were to marry, I would suggest that it would be best to alter things to be joint tenants. That way if one of you dies the other automatically inherits the deceased's share without any inheritance tax liability.

FinallyHere · 11/11/2018 14:15

https://www.gov.uk/tax-property-money-shares-you-inherit/joint-property-shares-bank-accountss*

There is no inheritance tax (IHT) due on anything left to spouse, a major benefit of being married. This does not depend on how you help the property, as joint or tenants in common.

If you are married and are joint tenants, you will inherit his share of the house and there is no IHT to pay.

If you are married and are tenants in common, and he leaves his share of the house to you, there is no IHT to pay.

If you are not married and are joint tenants, you will inherit his share of the house and there may be IHT to pay, if his share is worth more that the IHT allowance, or that allowance is used up with other legacies

If you are not married and are tenants in common, and he has willed his share to you, there may be IHT to pay, if (as above)

If you are not married and are tenants in common, and he has willed his share to someone else, say DD, they may be IHT to pay, if (as above)

You can get around all these scenarios, for example he could leave his share in trust to DD, with you as trustee or to DD absolutely once she is an adult, and then take out life insurance to cover the IHT.

You both really need a solicitor to go through the implications, say adult DD gets married, then divorced, would you be protected? Etc etc etc.

p.s. can you tell that we got married not for any romantic reason, but to ensure we would each be able to stay in the house, when the first one of us died.

bubbles108 · 11/11/2018 14:19

Wow @FinallyHere

Great post 👍

PoisonousSmurf · 11/11/2018 14:24

Get yourselves down to a registry office with a couple of witnesses and get married. Don't need all the extras. If he can't do that for you and the child, then what does he really think about any of your futures?
You don't even need to change your name, so who would know anyway?

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