If you are a cohabitee you need to consider others in your Will: we go through some of the options
We have seen a number of competing interests and arguments arise in cases of the death of a cohabitee; it is worth ensuring that your Will is correctly crafted to take care of likely scenarios.
What are the potential issues?
The persons you leave your home to may wish to realise the value of their gift but your cohabitees may be anxious to safeguard against this by securing their occupation in the home, and rent-free.
Careful and thoughtful planning is needed to avoid disagreements over conflicting interests and we set out below some options that could provide a balance between these competing interests so that you can be seen not to have favoured one set of family members over the others.
In one instance, a granny annexe was built that was exactly that: a separate annexe built especially for the grandmother, using her money. On her demise, would her cohabiting child take ownership of the building, including any increase it provided to the value of their home?
Option to purchase
One solution is to draft your Will in such a way that the Executors offer your co-owners the option to purchase, after your death, your share in your home from your estate and at the market value at that time.
Your co-owners then have the option to accept this offer within the timeframe you have set out in your Will and you could provide any timeframe that you think fit.
Your co-owners will then know that they have a legal right to purchase your share of your home but they will have no legal obligation to enter into such a purchase. Without this, it creates uncertainty for your co-owners if you leave your interest in your home to your beneficiaries in your Will. This means that the persons inheriting that share could sell or refuse to sell to your co-owners; it will be entirely their choice.
Right of occupation
A person who is not your co-owner inheriting your share of your home under the terms of your Will, may feel that they are entitled to sell that share or at least should be entitled to exact rent from your cohabitee.
Therefore, it may be wise to create an obligation (usually referred to as a Trust) for your co-owner to continue benefiting from your share of your home – this could be for their lifetime or for a term of months or years.
The advantage here is that you are preparing to protect your cohabitee and this could avoid a potential claim against your estate. The disadvantage however, is that your beneficiary will need to wait (possibly until the death of your cohabitee depending on the terms you set out in your Will) to realise their interest.
Right to purchase, together with a right of occupation
If you are mindful to create a ‘Right of Occupation’, then you may wish to combine this with the ‘Option to Purchase’. This would create a more comprehensive Will, and provide more options for your cohabitee.
If granting a Right of Occupation for a term of months and then the Option to Purchase is included, this could provide time for your cohabitee to raise finances to fund the purchase, or to find alternative accommodation.
Where there is a Right of Occupation for life then there are often more questions to consider.
What if the surviving cohabitee wishes to move (for example the property is too big or requires too much maintenance which they can’t afford or are unable physically to do) then they may wish to downsize. Bolted onto the Right of Occupation could be a Right to Move which would mean that your Will’s share of the net proceeds of the sale can be used to contribute towards the purchase of a new property for the survivor to live in.
Any contribution made towards this new property will still belong to your estate and will still be protected for your ultimate beneficiaries.
Writing your Will
It is, of course, important that you write your Will correctly in the first place.
One Will is not suited to everybody’s circumstances and requirements, so it is important that your planning and Will drafting is bespoke to you.
We are happy to discuss your options with you to ensure your Will is appropriate for you and if you feel that you need help in this area, please contact Jensen Bourke today at Cunningtons on 01273 725 229.