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Khan Family Case: Joint Tenants VS Tenants in Common

25 Jan 2022

Posted in Case Studies

Mr and Mrs Khan together with their son were advised by Bharat.  Mr and Mrs Khan  jointly owned a property and there was no mortgage against the property.  The total value of their estate was approximately £600,000 so at the current rates, Inheritance Tax was not an issue.  They were worried about the care homes fees that they might have to pay in the future if either of them had to go into a care home.

Bharat checked the Land Registry title documents which confirmed that the property was owned as joint tenants. This means  that, both Mr and Mrs Khan effectively own 100% of the property and not as equal owners of 50% each.  If one of them were to die, the surviving spouse continues to own the whole property regardless of what may be stated in their Will.

As the surviving spouse will continue to own 100% of the property. In the event that if the surviving spouse in the future needed care, the Local Authority may be able to  take the full value of property  to pay for the care fees.

Bharat advised Mr and Mrs Khan that we need to ensure that the property moves from joint tenancy to tenants in common in equal divisible share of 50%.

The solution was a mirror Wills with life interest trusts. on first death their respective share of the property would not go to each other but into a life interest trust. So If Mrs Khan died first her share of the property would go to her son but Mr Khan would have the benefit of a life interest in the property meaning he can continue to live in the property until his death.  If he decided  to remarry or needed  care then only Mr Khan’s share of the property would be affected.

Both Mr and Mrs Khan felt reassured that who survives between them will always have a home to live in for life and that upon both their death’s the property dispute solicitors will be inherited by their son.

Under the trust their half of the property cannot be used to pay care home fees of the surviving spouse. This avoids all of their assets going in care home fees and any future potential conflict which could arise on a second marriage. 

A life interest trust has ring-fenced Mr and Mrs Khan’s property within the trust.  This prevent them from being taken into account were the survivor to require either residential or nursing care in the future. The trust may state that the right to receive any benefit from the property would cease when the survivor permanently leaves the property.