Should I Affect My Tenancy In Common?

Posted on: 04 February 2009 by Gareth Hargreaves

50connect reader William asks independent financial advisor Peter McGahan about his tenancy in common agreement.

Tenants in common is one of the ways to hold title, to own property, by two or more individuals. It is also referred to as tenancy in common.

There is no limit to the number of individuals who can hold title to one piece of real estate. A property held by tenants in common can be owned by two owners or 100+ owners.

But can you change affect your tenancy in common to offset any future long term care costs?

William asks.

If I affect a tenancy in common on my house with my wife to a 50/50 split would this alone help to offset any future long term care costs that could be claimed against the property if I should die and my surviving spouse needed long term care?

Both our shares in the property would be left to our son and daughter. I have been told this would be classed as avoidance and make no difference.

Peter says:

Unfortunately the person who has told you that this is avoidance is 100% incorrect. Perhaps it's an adviser trying to sell you insurance!

There are many justifiable reasons for setting up as a tenancy in common and that would be the reason you would set up your ownership in this way. Perhaps your previous commentator should refer to the Crag report which is pretty clear on the subject.

There is a rule called deliberate deprivation of capital and that is where you deliberately decrease the value of your estate to avoid paying care costs. As long as your tenancy in common wasn’t affected when you were expecting to go into care there should be no issue.

In any event if you prove the reason you did it was for other motives then there would be no issue.

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