Property Ownership: Pitfalls on Second Marriages

A recent High Court case emphasises the importance of estate planning and correct will drafting to protect the interests of married couples who have children from previous relationships or who wish to leave their interest in their property to different people.

Mr and Mrs Scarle, who each had children from a previous marriage, were both found dead at their home. Due to the circumstances of their deaths, it was difficult to know who passed away first. This matters. If Mr Scarle died first, his share in the property would have briefly passed to his wife then, after she died, to her children. If Mrs Scarle passed away first, her share would have passed to her husband and then, on his death, to his children.

It is likely that Mr and Mrs Scarle owned the property as joint tenants. This type of ownership means that on the death of one of the owners, their share automatically transfers to the surviving owner, regardless of the terms of the will. When the surviving owner dies, the property is passed in accordance with his/her will which means that the testamentary wishes of the first to die are not fulfilled.

These difficulties can be avoided by, firstly, changing the form of ownership of the property and, secondly, creating a life interest trust in the will.

A couple can also own property as tenants in common which means that when one passes away, their share will be distributed in accordance with their will. For a couple who have children from previous marriages, this means that their share of the property can be passed on to their respective children regardless of who dies first.

This can mean however, that the surviving spouse can be ‘forced out’ of their home by the deceased’s children. To solve this problem,  couples can make provisions in their wills to put their respective half share of the property into a trust and give each other a life interest in that share. This way, the surviving spouse would be able to live at the property their whole life and the children of the deceased could only sell the property on the death of the surviving spouse or with their consent.

If you want to read more about this case please click here.