Power of Legal Will

bazthecoillte

Hi
I am an umarried man paying a mortgage with my partner. The mortgage is in my name solely. I pay Mortgage Protection which will pay off our mortgage in the event of my death but the property will be tranferred to my Next of Kin (my parents as I am unmmarried). The problem is my partner also pays and she would have to pay tax to have it transfererred into her name upon my death.

Is this correct and if so would a will stating that it be left to my partner sort this out?

Thanks in advance

seamus

Speak to your solicitor in this regard. It sounds like the arrangement you have on the house is one of "tenants in common", whereby you both separately own a share in the house which you are (relatively) free to sell on as you wish without the consent of the other.
In the event that one of the tenants in common dies, their half of the property automatically passes to their next-of-kin.

You can change this arrangement to one of "joint tenants", which still gives you both an equal share in the house but neither party can sell without the consent of the other and in the event of the death of one party, the other becomes the sole owner of the entire property.

Specifying your partner in your will may still cause her to incur some costs to receive it. However, registering the property as a joint tenancy will avoid this because she would not be "receiving" anything - in a joint tenancy, both owners have equal ownership of the entire property, whereas tenants in common very specifically own a certain share of the property each.

If you continue on as you are, in the event that you have children (and don't get married) your will could end up being useless/torn to pieces unless it provides for the children's minimum entitlements.

IANAL though and the solicitor who asisted you with the property purchase can advise you best.

bazthecoillte

Thanks Seamus - will bare this in mind and speak with the solicitor.

seamus

Sorry baz, only re-read your OP now.

From your language, I'm guessing that your partner's name isn't on the deeds of the house at all?

In this case, in order to have her name added to the deeds, afaik you will have to pay stamp duty as she is effectively buying a share in the property. So that could be expensive.

In the event of your death then, the entire property would pass to your next-of-kin and to transfer the house back to your partner, she would have to pay stamp duty on the property as well as gift tax (or maybe capital gains) based on the value of the house. Even if you will it to her, she will have to pay stamp duty and inheritence tax. In addition, the next-of-kin to whom the property is transferred, may have to pay inheritence tax, though I don't know much about that area.

So assuming she's not on the deeds, there's no way around paying stamp duty (except if you marry her ).

Though a solicitor will know exactly what to do in this situation.

dats_right

It would appear from what the OP said that, by virtue of the fact of the mortgage being in his sole name that the property is also in his sole name and no issues of co-ownership would seem to arise. If I am right then the only way to ensure that your partner inherits the property on your death is through a Will, otherwise intestacy rules apply and your partner because she is not your spouse will get nothing.

If you were to die and your partner inherited the property through your Will mortgage free, as a result of your mortgage protection policy, then no stamp duty issues arise in the transfer of the property. However, Inheritance Tax (or CAT to me more precise) issues most certainly do arise. Depending on the precise circumstances she could be able to claim Dwelling Exemption which could mean not having to pay any CAT on the inheritance. If howver, she were not eligible to claim the Dwelling Exemption it would mean that as she is a stranger to you for tax purposes, she would fall into Group C meaning that at present she could only inherit from you €21,700 without incurring CAT, anything above that would be taxed at 25%. E.g. if the property were valued at €321,700 it would mean that she would have to pay tax on €300,000 at 25% i.e.€75,000! If you were married no CAT is payable.

The sitaution is even more complicated if you are hoping that after you die and your next-of-kin inherit the property and transfer it to your partner. Suffice to say that the Revenue Commissioners would have a field day!!

Do yourself a favour OP and make an appointment to discuss matters with your solicitor.

bazthecoillte

Yes Seamus and Dat's Right, her name appears nowhere on the deeds or on the mortgage. Thanks to you both for your efforts on this. I must get this discussed with a solicitor asap.

Baz