"I Thought My Home Was Mine After My Relative Died"

Certain individuals, including spouses and children, can bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) for “reasonable financial provision” from a deceased’s estate. The Court has wide discretion when deciding these claims, as each is different and will have unique facts and circumstances.

However, cases which involve disputes over the deceased’s jointly owned property are becoming increasingly common. Property can be jointly owned in two ways:

As joint tenants: upon death, the deceased’s share of the property will automatically pass to the joint owner regardless of the Wills/intestacy rules – the survivor becomes the legal owner; this is called survivorship.
As tenants in common: survivorship does not apply, and the deceased’s share of the property will fall into their estate and be dealt with either under a valid Will or the intestacy rules.

However, suppose at the time of death, the deceased’s assets consist of only property which is owned as “joint tenants”. In that case, a problem may arise for those making a claim under the Act, as the operation of the rules mentioned above mean that there could be insufficient assets in the estate that could be available and used to make financial provision.

However, under Section 9 of the Act, the Court can order the deceased’s share of the property - owned as joint tenants - to be treated as part of the deceased’s net estate for distribution.

Nevertheless, it is important to note that the Court has wide discretion regarding whether to exercise powers under Section 9 and must ensure that the order is “to such extent as appears to the court to be just in all circumstances of the case”. If a claimant can successfully argue the application of Section 9, the deceased’s share of the land/property in question could form a significant part of the estate, increasing its financial value.

The implications of section 9 are illustrated below:

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Jointly owned property at risk from Inheritance claims v2

Case Study 1

Claimant’s perspective

The deceased was an 82-year-old man who had one biological daughter and died without leaving a Will, meaning he died intestate.

His daughter lived with her father for over 35 years in the family home, which was initially owned by him in his sole name. The family home was valued at £800,000. However, ten years before he died, he married a woman and decided to put the family home in joint names of himself and his new wife. The property was held as joint tenants.

When the deceased passed away, the deceased’s wife evicted the daughter from the family home. She did not have suitable alternative accommodation and had nowhere else to live. The daughter decided to pursue a claim under the Act as, in her case, his estate did not make reasonable financial provision.

The daughter qualified as an applicant under the Act because she was the biological child of the deceased and, largely because she would be homeless, could show a “maintenance need”.

However, the daughter did not initially appreciate that the deceased’s largest asset was the jointly owned property passed to his wife by survivorship on his death. Consequently, the estate had insufficient funds to make financial provisions for her.

Assistance and opportunity for remedy were availed to the daughter by invoking section 9. Here she sought to sever her father’s share of the jointly owned property to allow his share to be “cut” from his spouse’s and be treated as part of his estate.

The benefit to the daughter was the ability to “inflate” the estate from a moderate value to one of substance. The Act could assist, but as can be seen in the case study below, the spouse was put at risk financially, and the continued occupation of her home was in jeopardy.

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Case Study 2

Defendant’s perspective

The deceased was a 70-year-old man who initially owned a property in his sole name. Soon after purchase, he decided to transfer it into joint names of him and his son. The property was then held as joint tenants.

The deceased executed a Will leaving his entire estate to his cohabiting partner of five years. At the date of his death, the deceased was living on the property with his partner. Under the rules of survivorship, the property passed to his son, who transferred the property into his sole name after his father passed away. He then took steps to obtain possession of the property as his father’s partner was still occupying it.

The partner made an application under the Act for a determination pursuant to section 9 for the deceased’s severable share of the property to be treated as part of his estate. The property was estimated to be worth around £300,000.

Given that the partner owned two other properties worth £500,000 in her sole name and did not have a maintenance need, the son could defend against her application because it would not be “just” in the circumstances for the Court to make the order.

This case summary demonstrates the competing interests that can arise and a defendant’s power to defeat a claim and successfully secure the property.

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Summary

The perceived suggestion that, on death, property rights are secure needs to be looked at carefully, particularly where there are complex family dynamics and interests of third parties. Few recognise that it is possible for property owned as joint tenants to be factored back into the deceased’s estate in respect of Inheritance Act claims, but this is at the Court’s wide discretion and depends on the specific facts of the case.

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Jointly Owned Property At Risk From Inheritance Claims