2

In the UK....

If an elderly parent wanted to buy a property to live in, and have the property owned by their children so that it passes to them when she passes, what structures are available and what are pros and cons.

I can imagine 2 options:

  1. She could buy the property and put it in the names of the children.
  2. She could create a trust or some legal entity to own the property, and put that in the names of children.

The relevant goals here are:

  1. The ownership is given to the children at the time of purchase and cannot be reversed.
  2. The parent cannot be forced to move out of the property.
  3. This arrangement is not related to her last will and testament.

Are there any established structures to make this work? Are there other details that would depend on the structure, for example tax?

2

As an alternative to joint tenancy, the property could be owned by the children with the parent having a Life Estate.

This would need to be set up by a lawyer and properly registered - there will be additional cost but it means that the children cannot move into the property without the parent's permission if this is a thing that matters to you.

  • This solution seems to be a better fit for my particular case. As I understand it can be set up to pass to the children irreversibly, with the added advantage that the parent can enjoy the home uninterrupted in their lifetime. Thanks. – Julian Mann Aug 19 '15 at 18:30
  • @JulianMann If you are considering this as a means of avoiding Inheritance Tax on the value of the property, you need to be aware of Gifts with Reservation of Title. – WS2 Sep 24 '15 at 20:22
5

Joint tenancy (as opposed to tenancy in common) would accomplish all of these goals. Joint tenancy gives each individual the absolute right to occupy the property (each person owns the whole property). If one dies the property automatically passes to the other joint tenant(s), which is known legally as the right of survivorship. The child(ren) could never force the parent(s) (other joint tenants) to vacate the property; on the inverse, however, the parent(s) could not deny the child(ren) the ability to also possess the property during their lives, if they so chose to do this. I am assuming if the children ran into hard times and needed to live there, it wouldn't be a problem, but this should be specifically addressed with the client.

For a valid joint tenancy to be created, you would simply need to have:

a. Unity of title: whereby the joint tenants must hold title to the property under one document (i.e., the title deeds);

b. Unity of time: the joint tenancy must start and end on the same date for all the joint tenants (end date being the death of the final joint tenant, who will/should have passed through will/trust to an heir the title interest;

c. Unity of possession: all joint tenants have equal rights to possess the whole property (as mentioned above, the children could occupy);

d. and finally, Unity of interest: joint tenants must have equal interests in the whole of the property.

This is the simplest way to do this while meeting all objectives.

  • I like this arrangement and really appreciate the detailed answer. Sorry I couldn't comment until I had enough rep. I'm going to accept @DaleM's answer though, because A.) during the parent's lifetime she needs control of the property with no one claiming the right to enter, and B.) some of the children are abroad part of the year, and having access to somewhere to stay in the UK can affect their residency status in the eyes of the government. – Julian Mann Aug 19 '15 at 18:18
  • Absolutely, whatever suits your needs. I was just thinking of the simplest, cheapest way to accomplish the objectives. An irrevocable trust will certainly work. I'm not sure what you mean re: the residency issue ( if the need an address the trust won't create that) but regardless, that's a collateral issue. Best of luck! – gracey209 Aug 19 '15 at 18:23
  • I see what you mean now. I was assuming UK was their domicile anyway, which I didn't get the distinction. – gracey209 Aug 19 '15 at 18:57
  • Joint tenancy doesn't actually fit: The parent could sever the joint tenancy (at which point it becomes a tenancy-in-common), and leave their share to the Upper Wadding Cats Home. The children could force the sale of the property (and hence force the parent out). – Martin Bonner Nov 9 '16 at 13:15

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