Post death severance of joint tenancy…H & W were Joint tenants of matrimonial home. W died 6 months ago with her Will leaving H as sole beneficiary. Is it possible to do a post death severance and then vary W’s Will to leave half of the Property elsewhere?..
John Edge
Legal Eagle Wills Ltd
Yes indeed, I have done this quite often.
Cliona O’Tuama
Solicitor
Yes if H agrees.
But I would be interested to know why.
Paul Davies
Clarke Willmott LLP
H cannot sever the joint tenancy retrospectively but can gift the half share he inherited in a DOV.
Simon Northcott
Yes, it is possible for H to use a variation under s.142 IHTA 1984 to make a gift of W’s notional half share to a third party, adopting the fictional severance route. However, it does not vary W’s will –it will be a deemed variation of the dispositions on her death.
Paul Saunders
I have often severed a joint tenancy retrospectively and HMRC have raised no objections.
Cliona O’Tuama
Solicitor
If care home fees considerations are relevant, however, my understanding is that a retrospective severance could be regarded as a deliberate deprivation of assets (if it meets the test otherwise), as opposed to a severance during the testator’s lifetime.
Ben Leach
Molesworths Bright Clegg
Paul.…deceased wife’s Will varied to leave H a life interest in ½ share of property to protect wife’s interest against care fees……H in mid 60s and very healthy !
John Edge
Legal Eagle Wills Ltd
Is the following relevant and helpful? The distinction between DOV for tax and property law purposes:
https://www.gov.uk/government/publications/nil-rate-band-discretionary-trusts/practice-guide-70-nil-rate-band-discretionary-trusts
Barry Foster
Utmost Wealth
Can anyone please advise the procedure for achieving a post-death variation of a joint tenancy given that it will be made by a sole executor…thanks.
John Edge
Legal Eagle Wills Ltd
On death of a co-owner of a joint tenancy, the legal and beneficial interests vest in the survivor(s). Nothing passes into the estate of the deceased co-owner.
Accordingly, the executor/administrator of the deceased co-owner has no standing to make a gift of the deceased’s former interest.
Any purported severance is a personal gift by the surviving co-owner(s) to the beneficiaries named in the variation, no matter how it is dressed up for IHT and/or CGT purposes.
Any such post-death variation needs to be made by the surviving co-owner(s).
Paul Saunders
Hi Cliona I would like to do this on an estate where H has died and W wants to retrospectively sever the joint tenancy then do a deed of variation to put H’s fictional half share of the property into a life interest trust (to ring fence half the house again care fee etc if she ended up in care later in life). Do you have a precedent wording you might be prepared to share as to how you would sever the joint tenancy retrospectively?
Liz Head
KJ Smith Solicitors
Once H has died, the joint tenancy can no longer be severed.
The mechanism to gift the share of property passing by survivorship is for the survivor(s) to enter into a variation gifting the deceased’s notional entitlement to the intended beneficiaries incorporating the fiction that the joint tenancy was deemed to have been severed and the deceased gifted his share to those beneficiaries.
If the purported severance is made outside of the instrument of variation, the variation itself may be ineffective.
Paul Saunders
The death of H results in the jointly held property passing by survivorship to W. It cannot then be subsequently severed by W post H’s death.
However, use of IHTA 1984 s142 in essence does enable such a severance to occur for IHT (and CGT) purposes.
To achieve such severance requires that it is included as part of the DoV itself under which it is provided that W is deemed to have severed the joint tenancy prior to H’s death then enabling W to redirect as appropriate.
Malcolm Finney