A woman has written to the financial advice service This is Money asking whether she would be allowed to remain living in her home if her husband, who plans to leave the property to his two children from his first marriage, dies before her.
The reader explained that she and her husband moved nearly a year ago from a house he had owned with his first wife, who died many years ago. When the couple first got together, it was agreed that if he died, that house would be split between his two children, with the reader allowed to live there until she died. But the new property was bought using her husband's money and was registered solely in his name.
"His brother-in-law got him and his children to sign documents when it was his other house but he's not sure what it was he signed," the reader wrote. "Do we need to get something in writing so that if he died I could live here until I have passed... I am worried about what will happen if there is nothing in writing so to speak and his children change their mind."
A common but risky arrangement
Tanya Jefferies of This is Money said it is common for a spouse to leave a property, or their share of it, ultimately to children from a former marriage while arranging for their current husband or wife to go on living there for as long as they live. She said this compromise is "generally regarded as fair" and, if set up properly by a lawyer, "can work well," preventing children from evicting a stepmother or stepfather, or a surviving spouse from cutting stepchildren out of an inheritance.
She said the couple were right to question whether their house move meant any earlier legal arrangements still stood, and asked Rachel Waller, a partner in the wills, trusts and estate dispute resolution team at law firm Excello Law, to answer the question.
What the lawyer advises
Waller said a great deal depends on the documents signed for the former property, so these should be found and reviewed first. She said the present arrangement "should be recorded formally," warning that an informal understanding does not provide the certainty of a properly drafted document, and that paperwork relating to the former property "may not protect you in the new home."
She advised the husband to obtain the documents his brother-in-law had arranged, the title registers and conveyancing papers for both properties, and any existing wills. The earlier paperwork might be a declaration of trust, an agreement, a will or something else, and its wording will determine whether it created binding rights and whether those rights applied only to the former house, its sale proceeds or a replacement property. Waller said the couple should not assume an arrangement covering the old house transferred automatically when it was sold, since "often it will not."
Because the new property was bought with the husband's money and registered solely in his name, Waller said the ownership position and his will should be reviewed. If he died without suitable provision, his existing will or the intestacy rules would apply, and while his wife would inherit as his spouse, that would not necessarily guarantee her a lifelong right to remain in that particular home. She said the wife could seek reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, but warned that court proceedings would be "costly and stressful, with no guaranteed outcome." Court action, she said, "is a last resort, not a substitute for planning."
Life interest or right to occupy
Waller said the usual solution is a new will giving the surviving spouse either a life interest or a carefully drafted right to occupy the home, with the property or its value passing to the children once that interest ends. A life interest can provide wider benefits, she said, while a right of occupation may be confined to providing a home, and the right choice depends on the couple's full circumstances, finances and the husband's wishes.
She said the drafting should cover who pays council tax, utilities, insurance, repairs and major works, whether any mortgage may remain, whether the property can be sold and a replacement bought, whether the wife can require or veto a sale, and what happens if she moves into residential care or no longer wishes to live there. It should also appoint suitable trustees, protect the children's eventual entitlement and cover the possibility of a child dying first. A lifetime trust or declaration of trust could also be considered, Waller said, though this may bring extra administration and conveyancing consequences, and if a trust of land is created, an appropriate restriction may be needed at HM Land Registry. Registration can protect an arrangement, she said, "but it cannot cure defective drafting."
Next steps
Waller said both the reader and her husband should take detailed legal advice based on all the documents and circumstances, since the property description, ownership, trustee powers, occupation terms, earlier promises and their interaction with the wider estate "all matter." The husband may need independent advice if the couple's interests diverge, she added, and they should also consult a suitably qualified tax adviser before deciding on or implementing any arrangement, since a life interest, right of occupation or lifetime trust may carry inheritance tax, capital gains tax and residence nil-rate band consequences.
In practical terms, Waller said, the couple should retrieve the earlier papers, obtain current title information, review the husband's will and ask a private client solicitor to draft tailored provisions. Securing the wife's home while preserving the property ultimately for the children "is achievable, but it should be appropriately recorded," she said. Once arrangements are settled, she suggested explaining them to the family so everyone understands what is intended.
