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How To Leave A House To Someone In A Will?

Property Saviour » Estate Planning » How To Leave A House To Someone In A Will?

If you want to bequeath a property to someone in your will in the UK, the situation is relatively straightforward.

Any property, such as land and buildings located in the UK, can be given to a beneficiary through your will. If you own the UK property as a ‘joint tenant’, which is the case for many married couples and civil partners, then you will have a half stake in the home.

This share will be passed to your co-owner when you pass away, without any choice in the matter. The only exception is if you own a property as ‘tenants in common’, in which case you can control who receives your share of the property (including your spouse or partner until they pass).

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Table of Contents

Tenants in common or joint tenants

You should be aware that the value of your property’s share, whether you own it as joint tenants or tenants in common, will be taken into consideration when calculating inheritance tax – unless an exemption applies to your case.

If your foreign property is involved, the laws of the country where the property is located will determine the resolution, though some EU countries may recognize a will written under English law. However, Brexit may change this.

If this issue applies to you, make sure to check the validity of any will written in the UK that is disposing of a high-value asset outside of the EU.

Your home is likely to be the biggest asset that you leave behind, so making a will is crucial. This article provides information on the law in England and Wales, while laws in Scotland and Northern Ireland may be different.

Can I put my half of a house in my will?

If you and your spouse own a property jointly, you are considered ‘joint tenants’, which means that if one of you dies, the surviving spouse will become the sole owner. This is unavoidable and the ‘survivorship’ law supersedes any will or laws of intestacy.

Alternatively, you could sever a joint tenancy and become ‘tenants in common’. This way, you will each own 50% of the home and can then gift this half to whoever you’d like in your will – for example, your children.

Regarding property protection trust wills, they may seem like an opportunity to avoid paying inheritance tax, but this is not the case.

How To Leave A House To Someone In A Will
If you and your spouse own a property jointly, you are considered 'joint tenants', which means that if one of you dies, the surviving spouse will become the sole owner.

How to leave my house to my child?

This can be a complex situation since the property will typically pass to your spouse or partner when you die.

  • To ensure that your share of the family home passes to your children, you could become tenants in common, whereby 50% of your property would go to your child.
  • Alternatively, you could put your property in a will for your child, if you own the home outright. If you have a spouse, you could let them live in it for the rest of their life and then have your child inherit one or both shares.

Additionally, you could take out a ‘property protection trust’. This will enable your spouse or partner to remain living in the property for the remainder of their life.

Should your spouse or partner die, the terms of their will can dictate that their half of the home is placed in a ‘will trust’, the terms of which are specified in the will.

Who should you never name as your beneficiary?

It is recommended that you do not name minors, individuals with certain disabilities, or your estate as beneficiaries in your will.

Rewording the sentence will make it easier to read and will also help to correct grammatical errors. Keep the same number of paragraphs and the line breaks in between them.

  1. Minors are not able to get their inheritance until they reach the legal age. This can be a tiresome process, as the court has to pick someone to manage the funds.
  2. If you name a person with disabilities who receives government aid as a beneficiary, they could lose their benefits. To prevent this, consult with a solicitor who specializes in creating supplemental needs trusts.
  3. Inheritances that are part of an estate have to go through probate. This also restricts how the assets can be distributed. You can only choose between a lump sum, which would make the entire amount taxable at once, or a distribution five years after the death of the deceased.

Step by step guide to leaving a house in a will

Step 1: How do you own your home?

How you leave your property to your friends, partner, or children depends on how you own it. There are various types of ownership, each of which will affect the way your will is written.

  • If you’re the sole owner of the property, you can simply name a new owner in your will and they will take possession when you die.
  • If you share ownership of the property with someone else, you are likely ‘joint tenants’. When you die, the person you share ownership with will automatically inherit your share, so your property is no longer yours to bequeath. However, you can still request your will.
  • If you own shares in your property with someone else, you are ‘tenants in common’. When you die, you can leave your share to someone else in your will, who will become the new tenant in common along with any surviving shareholders.
How do you want to split your property
When you pass on a property after your death, any remaining debts on it will also be passed on.

Step 2: How do you want to split your property?

If you are the sole owner of your property or a tenant in common, you will have to decide who you will assign the ownership or share of your home to. This includes your main residence, investment properties, land, or even a parking spot you own.

When you pass on a property after your death, any remaining debts on it will also be passed on. If there is an existing mortgage on the property, your heirs will need to make new arrangements with the mortgage lender to either pay back the loan or remortgage the house.

There are a few different ways you can divide your property. These are referred to as legacies, but only a few of them apply to properties. These include:

  • A specific bequest, where you leave a particular item or property that you own;
  • A residuary bequest, where you leave a percentage of the value of your estate (after debts);
  • A reversionary bequest, where you leave your property to someone and set up a conditional beneficiary in case they die too.

How can these bequests be incorporated into your type of ownership?

Consider making a reversionary bequest, where a partner is made the owner of the property after your death, while your child is named as the beneficiary if your partner passes away.

In this way, your partner has the right to continue living in the house until they die, but your child will become the inheritor afterwards.

Step 3: Navigating inheritance tax:

Inheritance tax is a tax levied by the government upon the total value of your estate upon your passing. This estate may include property, stocks, and other assets.

  1. If you leave your property to a spouse or civil partner, there is no inheritance tax to be paid since the home is not included in the value of your estate.
  2. If you leave your property to children or grandchildren, it does count towards the value of your estate and they will have to pay tax on anything over £500,000.
  3. If you leave your home to anyone else, it will count towards the value of your estate and they need to pay tax on anything above £325,000. The usual tax rate is 40%.

For example, if you leave a home worth £550,000 to your child, they will need to pay inheritance tax on the portion of the property over £500,000.

This will be 40% of £50,000, which amounts to £20,000. It’s important to note that you’ll have to pay inheritance tax on any assets of the estate that are worth more than £500,000.

So, if your child inherits the £550,000 property and other assets, they’ll have to pay inheritance tax on a greater amount.

How do I avoid inheritance tax on my property
Couples can now leave a property worth up to £1 million before any tax is paid - this was introduced in April 2017.

How do I avoid inheritance tax on my property?

You and your spouse may need to seek legal and professional tax advice to ensure you don’t have to pay inheritance tax on any assets inherited.

Couples can now leave a property worth up to £1 million before any tax is paid – this was introduced in April 2017.

This could save you up to £160,000 in inheritance tax, depending on who you leave your property to, the value of your estate and when you pass away.

If you leave your home to your spouse or partner, you won’t have to pay tax as long as it’s valued at below £1 million. Plus, if you leave the home to a direct descendant, you’ll get an additional tax-free allowance of £150,000 in the tax year 2019/20.

This will increase to £175,000 in April 2020, so it’s much higher than when it was first introduced in 2015 with a £100,000 allowance.

Taper relief

Gifts may be subject to inheritance tax. If the property was gifted within three years of the death of the deceased, the receiver will have to pay tax at a rate of 40%.

For properties gifted between three and seven years before death, the tax rate is based on a sliding scale known as ‘taper relief’. This is calculated according to the years between passing and the day the gift was given. Rates can be seen below:

  • Property valued at over £325,000, or gifted within 1-2 years of death: 40%
  • 3-4 years: 32%
  • 4-5 years: 24%
  • 5-6 years: 16%
  • 6-7 years: 8%

In addition, bequeathing your property to your partner can help you avoid inheritance tax. However, if you want to secure your children’s inheritance from taxation, you may consider setting up a property protection trust.

Step 4: How do you protect your beneficiaries?

When you bequeath property to someone in a will, you should ensure they receive it in its entirety. However, some issues could impede your beneficiary from getting the entire amount you’ve left them.

In the UK, joint tenancy is the most usual type of property ownership – if you and your spouse own the house, they will inherit it automatically upon your death.

Nonetheless, many couples prefer to switch from joint tenancy to tenancy in common (TIC). This allows them to give a portion of their share to their children.

So, why make this change? It’s easy to understand. No one knows what will happen after they die. With a tenancy in common, you can guarantee that your share of the property will go to your children.

And, the process to switch from a joint tenancy to tenants in common is very straightforward.

This is an awkward situation. If you leave half of the house to your child, your spouse will have a ‘life interest’ in it that prevents it from being sold without their permission.

 Although this may not have any immediate ramifications for your family, there is potential for issues to arise in the future.

How to create a property protection trust
If, after your death, your joint tenant needs to go into care, the local authorities can only target the portion of the property owned by them, leaving the share owned by your child intact.

Creating a property protection trust

A property protection trust is an effective way to safeguard your child’s inheritance after you die. Establishing one through your will won’t cost any more than a typical will.

If, after your death, your joint tenant needs to go into care, the local authorities can only target the portion of the property owned by them, leaving the share owned by your child intact.

As a result, if your child sells the property, they will not have to pay any capital gains tax, as the surviving tenant has the right to occupy the property and can claim principal private residence relief.

Capital gains tax is a tax on goods that have increased in value since they were purchased. If your property has gone up in value since your death and your child decides to sell it, they would have to pay this tax.

However, with a trust, the portion of the property owned by your child will be exempt from capital gains tax.

Step 5: Writing your will

Now you understand the fundamentals of how to leave your house in a will, the only thing left to do is to write it up.

We strongly suggest enlisting the services of a lawyer for assistance in calculating the complexities.

It may be beneficial to work with a real estate agent who is familiar with probate appraisals and sales. This will help you acquire an accurate valuation, which is essential for calculating the total worth of your home and estate.

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