Girlfriend's Inheritance in Question as Father Delays Adding Her to House Deeds

A daughter who inherited half of her family home after her mother's death faces potential complications because her name has not been added to the property's deeds, and her father has advised waiting until his death to address the ownership. This situation raises questions about inheritance tax (IHT) and the security of her inherited share.

Understanding Property Ownership

Jennifer Charlton, a partner in the private client team at Clarke Willmott, explains that the crucial factor is how the parents owned the property: as 'tenants in common' or 'joint tenants'. If the parents were tenants in common, they could each own distinct shares, allowing a portion to be left to someone else in a will. If they were joint tenants, the surviving owner automatically inherits the deceased's share, regardless of the will.

If the property was owned as tenants in common, a restriction may still be in place on the title, safeguarding the deceased mother's share. However, if the property was held as joint tenants and no restriction exists, the mother's share would have passed directly to the father, bypassing the will. It is possible to sever a joint tenancy to establish ownership as tenants in common, even after one owner's death.

Inheritance Tax Implications

Charlton clarifies that for inheritance tax purposes, liability is based on the beneficial interest in an asset, not solely on legal ownership. Therefore, the daughter's beneficial interest in half the property means that inheritance tax on her father's death will be calculated based on his remaining beneficial share. Her name not being on the legal title does not alter this IHT calculation.

Best Practice for Legal Title

While the IHT position is not directly affected, it is strongly recommended that the legal title reflect the beneficial interests. This provides the daughter with protection for her inherited share. Her father could transfer the legal title to both their names as joint tenants or tenants in common, making her a joint legal owner. Alternatively, a restriction could be placed on the title to notify third parties of her beneficial interest. Adding her name to the legal title would prevent her father from dealing with the property, such as selling or remortgaging it, without her knowledge and consent.