Legal Tip 339: Joint Tenancy and Asset Protection with Blended Families

There is an aspect to asset protection on death to consider when the family situation is complex. This is especially so when the only asset is the main residence.



Example

Marge and Homer are happily married when Marge finds out that Homer had fathered 2 kids before he met her. Homer has 5 children now, 3 with Marge, and 2 with a former member of Parliament.

Marge and Homer’s only asset is the main residence which they own as tenants in common 50/50.

Marge starting thinking about what could happen and is concerned about 2 things

a) Homer changes his will so he leaves his 50% to his 5 children upon his death, or

b) Marge dies first

If Homer dies first and leaves his 50% to each of his 5 children, those 2 other kids that aren’t Marge’s will own 20% of ‘her’ property. She might even have to pay rent to them and will find it impossible to mortgage the property or move house as it would mean she loses 50%.

If Marge dies first and leaves her 50% to Homer, he might later die and leave 20% of the house to each of his children which would basically mean Marge is funding Homer’s children from another woman.

There are many potential solutions to this problem, but Marge decides to go with a Joint Tenancy and to just try to outlive Homer.

They change the Tenants in Common to Joint Tenancy. This way if Homer goes first it doesn’t matter what his will says in relation to the property, it goes to Marge. She can then leave the whole property to her 3 kids with Homer and make Homer’s parliamentary kids miss out.

She notes that Homer’s children still could make a family provision claim and this could include notional estate orders over the property, but it is still safer than the alternative.