Property Ownership

Joint property owners need to understand the implications, on death, of the way in which they own the property as part of their estate planning.

There are two main options - Joint Tenancy and Tenants in Common

Joint Tenancy 

The vast majority of joint owners of property have a Joint Tenancy agreement. This is usually automatically arranged when the property is purchased, particularly if there is a mortgage. With a Joint Tenancy all parties to the agreement own the property jointly and on death the property automatically transfers to the surviving parties irrespective of the length of ownership or any other stipulation in a Will. In practice, this would normally be the family home purchased jointly and on death it would transfer to the surviving partner.

Tenants in Common 

With Tenants in Common each person owns their own share in the property. This would normally be equal shares, but any percentage split is possible. Each party is then free to leave their share of the property to whomever they wish as part of their Will.

If the property is the family home and one partner dies leaving their share to, say, the children, the survivor could be forced to sell the home to honour the other partners Will.

To avoid this the survivor can be granted a Life Interest in the property, or any substituted property, as part of the Will. This would mean that the survivor could remain in their home, with the beneficiaries receiving their share on the death of the second partner.

Once a property is held as Tenants In Common, to support Trusts created by a Will, it is vital that any subsequent purchase is also as Tenants in Common; otherwise the Trusts will not work.

The advantages of Tenants in Common are explained under the following sections, Protecting Your Home, Protecting Your Family and Inheritance Tax Planning.

Changing Ownership 

To change from “Joint Tenants” to “Tenants in Common” a Notice of Severance of Joint Tenancy must be agreed and signed by all parties. This agreement must then be registered with the appropriate Land Registry Office and any mortgage lender must be notified.

For couples living together where the property is registered in one name only the property will need to be transferred into both names to achieve the above. This is a straightforward legal transaction, the cost of which will be minimal in relation to the long-term benefits that could be achieved.

We can arrange change of ownership of your property, if appropriate to your circumstances, as part of our service to you.

Sections on “Protecting your Home”, “Protecting your Family” and “Inheritance Tax Planning” explain how you can use, this in your Will, for the benefit of your loved ones.