Leaving Your House in a Will

If you own a property in your sole name, your will can leave it to whoever you choose, whether that is one person, several people sharing it, or as part of the residue of your estate to be sold and divided.

It helps to think through practicalities, such as whether the beneficiaries will want to keep or sell the property, and whether your executors have the authority and funds needed to maintain it until it is transferred or sold.

How you own a property with someone else, typically a spouse, partner or family member, has a major effect on whether your will has any say over it at all. Under a joint tenancy, the property automatically passes to the surviving owner or owners on death, by the rule known as survivorship, regardless of what your will says.

Under a tenancy in common, each owner holds a defined, separate share of the property, and that share does form part of their estate and can be left by will to whoever they choose, rather than automatically passing to the other owner.

Many couples hold property as joint tenants without realising the implications, particularly where they want their share to go to children from a previous relationship rather than automatically to a new partner. It is worth checking the Land Registry title or deeds, or asking a solicitor, to confirm which applies.

If a property has an outstanding mortgage when you die, the debt does not disappear. Unless your will says otherwise, the property normally passes to the beneficiary subject to the mortgage, meaning they inherit the debt along with the asset and must keep up payments or repay it.

If you would prefer the mortgage to be paid off from the rest of your estate before the property passes to the beneficiary free of debt, you need to say so explicitly in your will, since this is not the default position.

Instead of leaving a property outright, some people prefer to give someone, such as a second spouse, the right to live in the property for their lifetime or until a specified event, with the property ultimately passing to other beneficiaries, such as children, afterwards.

This kind of arrangement, often set up using a trust, can be a useful way of balancing the interests of a surviving partner and children from an earlier relationship, but it needs careful drafting and is a good example of when to seek specific advice.

Suppose a house worth 250,000 pounds, with an outstanding mortgage of 50,000 pounds, is left equally to two children, and the will is silent on the mortgage. Because the default rule applies, the property passes to the children subject to the debt, so they inherit a net value of 200,000 pounds between them, and must either continue payments, remortgage, or sell the property to clear the loan.

If the will-maker had instead wanted the children to inherit the house free of the mortgage, they would need to include a specific clause directing that the debt be repaid from the residue of the estate before the property passes, so the executors know to settle it before transferring the property.

A frequent mistake is assuming a will controls a property that is actually held as joint tenants, meaning the gift in the will has no effect on that property at all because it passes automatically to the surviving owner. Checking the form of ownership before finalising a will avoids gifts that turn out to be meaningless.

Another common issue is leaving a property to be shared between several beneficiaries without addressing what happens if they disagree about keeping, renting or selling it, which can lead to prolonged disputes. Naming a lead decision-maker, or directing that the property be sold and the proceeds divided, can prevent this.