Although it’s the biggest purchase in most of our lives, it’s amazing how little we delve into how our home is really going to be owned between ourselves and our partner.
Did anyone sit down and discuss with you how you would like to own your home with your partner? Very probably not.
You see, there are two forms of home ownership in Scotland when two or more people purchase a home together.
Two Forms of Home Ownership
By far the most common is a purchase with what is called a Survivorship Clause. This is known as Joint Ownership in the rest of the UK.
Basically, what this means is that should one partner die, the survivor automatically inherits that partner’s share, regardless of what they may have said in their Will.
The second is ownership with no Survivorship Clause in the titles, known as Tenants in Common in the rest of the UK. For ease, lets call it Ownership in Common.
Given how convenient it could be in the unfortunate situation of one partner’s death, why would you not want a survivorship clause?
Well, there are quite a few reasons.
Let’s look at some scenarios where partners own their home with a Survivorship Clause.
Take a couple combining households and living together but not getting married. Unfortunately, they decide to go their own ways. Should something happen to either before their assets are divided, the survivor will automatically inherit the house. That may not be what the deceased would have wanted.
And supposing there are children separately to each partner. If one partner dies the house automatically goes to the survivor. But suppose they remarry and then rewrite their will to leave the house to the new partner. The children of the deceased partner have just been disinherited.
Very often in second or third relationships unequal contributions have been made to the purchase. If the intention was to ensure that the children of the deceased received a share of the value of the house that reflected the initial contribution, this cannot be accommodated if there is a survivorship clause. The survivor inherits 100%.
Finally, the greatest impact could be felt if a partner ends up in care. We all know how much that costs – £1000 per week is not uncommon.
Now in planning your estate you have to be careful you don’t transfer assets whilst you are alive to deliberately remove them from assessment for care. It’s known as deliberate deprivation. However, let’s look at a not untypical scenario.
Partner 1 goes into care. In terms of finances, this might not be a problem because whilst Partner 2 is still living in the family home, it won’t be attacked to pay for care.
But supposing Partner 2 dies and there is a survivorship clause? The family home goes straight to the partner in care and then becomes an asset which the Local Authority will be keen to take for payment of Partner 1’s care. This wouldn’t have happened if there had been no survivorship clause and at least half the family home would have been saved from being sold to pay for care.
These are problems which the vast majority of home owners could face because no one took the trouble to explain the ramifications of a Survivorship Clause.
However, there is good news; all of the above can be avoided by arranging a Home Protection Plan.
Home Protection Plan
Our Home Protection Plan restructures the ownership of your home to remove the Survivorship Clause.
We then right a Will for each partner. Each incorporates a Trust so that the estate of a deceased partner does not pass to the survivor. It goes into Trust for other beneficiaries, most commonly children. The Trust also gives the children a wide range of protections for their inheritance.
The Wills are written so that the survivor can still enjoy the benefit of the deceased partner’s estate if need be.
The Home Protection Plan uses standard Will writing practice but combines many facets to produce a bespoke solution. If you have a standard Will or, worse still, none at all, chances are you could end up with results that weren’t intended, and your home disappears in front of your family’s eyes.
So, don’t sleep walk into losing a home. Take some very straightforward steps to make sure you really know who owns your home. Speak to us at Legacy Planning Solutions.