Survivorship Destinations
Elspeth Talbot, partner with leading private client solicitors, Bird Semple recommends we pause for thought on the issue of Wills!
So you think you haven’t made a Will? Think again? you may already have, albeit without realising!
Many couples have a mini-Will in the joint title of their house because of the inclusion of a survivorship destination, i.e. a provision that means when one of them dies, their half of the house passes to the other. This happens automatically on death without the need for any intervention by the surviving joint owner or by a solicitor.
As an example, Fred and Janice bought their house in 1985. In 2000, after making a lot of money in their bakery business, they decide to make Wills not in favour of each other (they have enough of their own to live on) but instead leaving their respective assets to their children Alfred, Bernard and Colin. They considered this to be the most tax-efficient way to do so. Janice subsequently died in 2004 and when winding up her estate, Fred was puzzled to find that her share of the house did not go to the children (as was intended by the Will) but instead passed to him. As a consequence, Fred’s estate is now worth more than he wanted and the children have less than they ought to have had. When he asked his solicitor why this was, he found out that there was a survivorship destination in the title deed; he either did not know it was there or had forgotten all about it.
The best way to avoid such difficulties is to ensure that there is no survivorship destination in the title deed; this can be done by simple instruction to your solicitor when purchasing a new house. Any existing survivorship destinations can either be removed by referring to them specifically in the formal Will or by signing and registering a new title deed.
The use of survivorship destinations is surprisingly common and specific instructions to include a destination in the title deed are not always sought by the solicitor. Often the consequences of inclusion are not explicitly explained at the time of the purchase of a house. In a few cases, the use of a survivorship destination will be appropriate but more often than not, they cause more problems than they solve and in my opinion are best avoided altogether.
Difficulties can also arise from joint ownership of bank accounts or shares. Again, the consequences of joint ownership are not always apparent or sufficiently explained – when opening the account or purchasing the shares but it can mean that the asset does not pass to the person you want on your death.
In summary, when considering whether or not you have made a Will, stop for a minute and think about jointly owned assets. Remember that these assets may be subject to a type of mini-Will and that your intended beneficiaries may not benefit in quite the way you hoped. And as always, I recommend that you seek professional advice to ensure your Will takes account of joint assets and survivorship destinations.
Article compiled by Elspeth Talbot
Posted by Administrator on Jan 15, 2005
