Our understanding is - the first deceased's estate is held in a discretionary will trust for the beneficiaries. Trustees are the surviving spouse plus one benificiary. A lot depends upon a clear belief that the benificiaries will not try to liquidate their interest in the will until the second spouse dies. Nothing is certain but the benefits to the benificiaries are clearly defined by reduced or nil IHT .
Ramon
I retrieved the following example of benefits from a google search on "tenants in common". there are many other examples
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QUOTE But if you are tenants in common, you each own an individual share of the property - and can decide who gets your share when you die. Both the husband and wife can therefore make use of their annual IHT allowance.
If a couple lived in a property worth 400,000 and were tenants in common, each would have a share worth 200,000. Unless they both had 55,000 of other assets, neither estate would be liable for IHT.
If your home is more valuable, you can set up a discretionary will trust. Under this arrangement, the assets of whichever of you dies first pass to the trust, not to your spouse.
Your spouse can still gain access to the funds held in the trust, but because they do not form part of his or her estate they will not be liable to IHT.
For example, if a married couple lived in a house worth 510,000, half of it would be liable for IHT if they owned the property as joint tenants.
If, however, they were tenants in common and each had a 50% share they could set up a discretionary will trust.
If, say, the husband died, his 255,000 share would pass to the trust and not to his wife. Therefore her estate would still only be valued at
255,000.
Under the terms of the trust she would be able to live in the property. On her death it would pass to the children, or whoever was set to inherit the estate. Her share of the house would be treated as a separate inheritance from her husband's share that is held in the trust.
Warburton says: "It is a very simple clause to include, but I have seen it missed out of a number of wills."
Cohabiting couples do not enjoy these IHT benefits. Even if they own the home jointly, they are regarded as single people and no assets can be passed on free of tax.
If an unmarried couple owned a property worth 510,000 and one of them died, the survivor would face an IHT bill of 102,000. UNQUOTE