Tenants in Common or Joint Tenants for future tax planning?

Hi Sanjiv

If Mr & Mrs Smith were to on the property on the basis of Joint Tenancy there would be less of a need to make Will. This is because they jointly 100% of the property. If one of them was to die the other would still own 100% of the property. If they were to purchase as tenants in common they would need to make a Will if they wanted to be certain the survivor got the share of the deceased. HMRC will treat Joint Tenancy as 50/50 for tax purposes.

Joint Tenancy is relatively easy to sever, which is a requirement if Mr & Mrs Smith would want HMRC to tax on something other than a 50/50 basis. They would also need a Declaration of trust to be drawn up to establish ownership of the beneficial interests and to file Form 17 with HMRC.

I don't think it is possible to say what the right answer is from the outset based on the above. It is a case of making a considered choice.
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Reply to the comment left by "CazT " at "14/02/2017 - 13:44":

They can indeed
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"less of a reason to make a will" - I think anyone who has assets is unwise to make a will -if you have buy to let especially. Suppose both spouses get killed with no wills in a car accident? Or one dies and the other dies ? What about cgt planning? What about inheritance tax planning?

It is always unwise to make a decision without considering the knock on effect may be. You might save one tax and walk into another.

Do you know the provisions of the law on intestacy (now will). I expect they would horrify you.

And also do a lasting power of attorney . What happens if you become non compos mentis ? If none, and you have sole assets (or death of one in a car crash and other injured so cant deal with affairs or have children). Answer -someone has to apply to the Court of Protection.
Wonderful

Sorry if I sound a Job's Comforter but these are real issues. And just to make it even better - what if you have to go into long term care? Most if not all of your hard earned money can be swallowed up without proper property planning.

As you may guess, I used to be a lawyer dealing with a lot of these issues. But they are real. Whilst a lot of the advice on here is very good, it is sensible to always consider whether you are solving one problem but then unwittingly causing another.

Take care

Although I typed "unwise not to make a will" for some reason it posted "unwise to make a will"

NOT the case at all. Definitely make them even if you are only very young. Especially if you are not married/not in civil partnership

Thanks for your illustration of nasties that can happen.

However, people in those situations should always consult a good solicitor. The reason is that there may be a claim under the Inheritance (Provision for Family and Dependents) Act 1975. That allows the court to make provision for eg a cohabitee out of a deceased person's estate. I don't know how far that order may go. But if anyone has been supported by a deceased person there is a chance of success. But you need a switched on solicitor who might negotiate a deal.

Everyone hates lawyers til they need one!!