I have just been through a very family-shattering experience due to inheriting a house with my siblings and I would like to know if there is a way to organise my will so my children will not have to go through a similar experience.
I own a house with my second husband and stepfather to my children. In my mind we own the house 50/50 as we bought and paid for it before we married.
I have “left” my 50 per cent to my two children equally and he has left his half also to them.
My question is: is there a better way to do this taking all the various computations that may occur, the one that concerns me most being: I go first and leave him with being in a three-part ownership situation and my children not really having any real asset.
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GD
There is very little as disheartening – and indeed potentially traumatising – as family disputes over an inheritance. They don’t even have to be acrimonious – although my postbag down the years suggest they all too often can be.
Family grows up together, they love each other and their parents but they also develop their own individual character. Priorities and attitudes can also be shaped by personal circumstances – our partners, if we have one; personal financial position; career; and health, among others.
On the other side, parents can have a utopian view of their family, assuming their children can and will work together to manage a share inheritance – such as a family home.
They might be right but when it comes to something as definitive as a will, it’s as well not to make too many assumptions. After all, you will not be around at that time to explain what your thinking was behind the arrangements you put in place.
But you also need to be realistic about the arrangements you put in place, trying to ensure they do not lead to unnecessary conflict.
The first thing you need to be very clear about is the ownership structure of this home. You say you and your husband bought it before you got married. The default position for partners or spouses buying a home is that it is owned by them as joint tenants and not as tenants in common.
The two terms sound quite alike but they are very different and the impact they have on the asset is dramatic.
Each owner of a property that is held as joint tenants is presumed to own the whole of the property, regardless of who actually paid what for it. The key impact of this is that when one owner dies, the property automatically passes to the other owner, or owners.
Critically, it does not form part of your estate and does not come into the reckoning under your will. It would pass automatically to your husband, their stepfather. What happened it when he dies is down to whatever he says in his will. That may reflect your current understanding, it may not. And he may change his mind after you die.
[ What capital gains tax will my wife pay on shares she inherits from me?Opens in new window ]
If the property is held as tenants in common, then you each own a set share. It could be a straight split – 50/50 – but it could also be held in different proportions to reflect who provided what funding for its purchase.
In this scenario, your share – 50 per cent or whatever – is yours to do with as you wish. You can leave it to your children and they would then own a quarter each, with your husband holding the other half.
Again neither you nor your children have any real control over what happens when their stepfather dies subsequently. He could leave it to them but he could just as easily leave it to someone else.
From your letter, you appear to believe the property is held as tenants in common. Of some concern is that this is your understanding in your mind.
It may be so but it would be unusual, so you would need to have some evidence – a document signed by both of you confirming that status. Otherwise, you run the risk of misunderstandings and even court proceedings down the line.
Opting for ownership as tenants in common is a double-edged sword, of course. If you each own a specific share of the property and your husband dies first, you have no guarantee that his share will pass to you, never mind your children. If, however, you hold the property as joint tenants, full ownership would pass to you under the rules of survivorship on his death.
And you can then do with as you wish in your will.
The one good thing is that both you and your husband appear to have wills.
This is important in this case as while your children can certainly benefit from inheritance from their stepfather, which would, alongside anything they get from you, be subject to the highest tax-free thresholds – currently €400,000 from parent to child – they do not have any automatic entitlement to inheritance.
If there is a will giving them something, they inherit, but in the absence of a will an anachronism of Irish succession law means stepchildren have no automatic right to inheritance from a step-parent.
Speaking of tax, given your children will each be inheriting a quarter of the property on your death – assuming as, per your letter, you die first – they are most unlikely to face any capital acquisitions tax bill at that point, unless the property was worth more than €1.6 million.
The only way I can see where you could guarantee what happens after you die – ie constraining your husband from changing his mind and leaving some or all of the house to others – would be for you both to enter an irrevocable trust in favour of your children in relation to this home.
That’s a really big step and one on which you would certainly want to take detailed legal advice. If you have a mortgage on the home, the bank could very likely object but even outside of that, irrevocable trusts are unwieldy structure with very specific tax and control issues. It is not something to do lightly.
Of course, once your children control the property they will have to decide what to do with it – sell or otherwise – and you will have no control over that anyway. They could find themselves in the same quandary you were over the house you owned with your siblings but hopefully not.
I understand you are somewhat scarred from your experience of dealing with the inheritance of a property alongside your siblings but relationships are built on trust and, ultimately, if you do die first you will need to trust that what you and your husband have agreed will ultimately happen.
Your ability to control things from the grave are obviously limited and attempts to resolve matters in stone before that are likely to cause you and your husband – and possibly your daughter – more hassle than peace of mind.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
