News : Roundswell & Sticklepath

Property owned jointly by two or more persons can only be held in one of two ways, namely as “beneficial joint tenants” or “beneficial tenants in common”.

“Joint Tenancy” means that i one owner dies the whole property simply belongs to the survivor (or survivors). This is automatic and no Will or other legal formalities are required. This is the usual method preferred by couples whose priority is to provide security for each other. However, if you wish to leave your ‘stake’ in a jointly-owned property to someone other than your co-owner (or owners) by your Will, you must convert the joint tenancy into a tenancy in common.

Where property is held as “tenants in common” each owner has a separate share in the value of the property (usually equal but they can be unequal shares, if appropriate). In the event of the death of one owner their share remains part of the estate and does not automatically pass to the surviving co-owner or owners. It can therefore be left to someone else, if so required, by means of a Will containing an express provision in this respect.

If property is held as tenants-in-common, however, it is important to make a Will, as otherwise the law of ‘intestacy’ dictates who inherits your property on your death and it may not pass to those whom you wish to benefit.

Tenancy-in-common is more suitable for people owning property jointly for business purposes or investment, or for couples who wish to keep their respective shares in the property separate for some other reason - for instance, if one party has children by a prior relationship and wishes to leave his or her share in the property to those children, rather than to the surviving co-owner. It is also commonly used by married couples and civil partners as part of arrangements for reducing Inheritance Tax, when combined with a Nil Rate band discretionary trust in a Will.

If a marriage or civil partnership breaks down, it may often be considered desirable to sever any joint tenancy in the matrimonial home and create a tenancy-in-common, to prevent the whole property belonging outright to one spouse or partner if the other dies. But in that event, it is essential to make a Will expressly providing for the disposition of the relevant share in the property, as required.

For further advice on this topic, talk to a solicitor specialising in Property and Tax (preferably one who offers free initial consultations).

Taylors Solicitors (Legal Helpline: 01271 812811)