Severing can have positive effects with regards to the Community Care Act to ensure at least half your property passes to your children if, after your death your partner should go into care. However, it could have a negative effect in the level of care given, if your spouse is left with reduced assets and put into a state care home. Find out more on Community Care.

This could be invested to produce enough income (say £15,000 PA) to pay for Nursing Home Fees without the Capital being eroded then the Community Care Act may not be a serious threat to your Children’s Inheritance.

Your half of the property passes on First Death into Trust for the lifetime use of your Spouse but for the ultimate benefit of your children. A Residential Rights Clause is normally included in your Will to allow the Survivor to live in the Property for as long as they wish. It will also give the Trustees permission to sell the Property and purchase another and invest any surplus Capital for the benefit of the Survivor. Find out more on Trustees.

If your house and other Assets are in joint names and you don’t hold other assets in your own name then your Estate will not have to go through Probate on your Death. If you sever your tenancy then your Executors will have to apply to the Probate Court for a Grant to enable them to deal with the Property. Find out more on Probate.

The costs involve in dealing with Probate will depend on who does the work. Typically a Solicitor would charge £1,500 - £3,000 to deal with a simple Estate including the transfer of The Property or £3,000 - £5,000 if you asked your Bank. If you subscribe to our Company and utilise our Free Advisory Service then you can dramatically reduce these Fees to £200 - £500 depending on where you live by doing the work yourself with our guidance. The minimum Fee you can expect to pay is £130 which is the Probate Courts charge.

Severance of Tenancy has no Tax benefits if you give your Spouse Residential Rights after your Death. The Capital Taxes Office has stated that even if no rights are granted they will consider each case individually if the Survivor continues to reside in the Property. We recommend an alternative Asset, and/ or action for Inheritance Tax Mitigation. If your Property is valued at over £600,000 and you wish to give your 50 per cent share of the Property, there will be Inheritance Tax to pay on your Death. It is imperative that you decide whether the Gift is Free of Tax or Subject to Tax. Remember Tax is 40% of everything over £300,000 and remember to include Gifts out of the Estate, seven years prior to your Death. Find out more on Inheritance Tax.

Trusts are Taxed at different rates depending on the type of Trust, but generally they are Taxed for Income or Capital Gains similar to individuals but with less allowances. Beneficiaries that are not Tax Payers can reclaim any Tax paid with Higher Rate Tax payers having to pay extra. Capital Gains Allowances for Trusts are half what an individual would expect to enjoy. The Property you live in is unlikely to produce an income, so Income Tax is not usually an issue.