Owning and inheriting property, and the right of survivorship
When property is bought by two or more people, they must decide on how they wish to own the property. There are two ways you can own a property :-
- Joint Tenants OR
- Tenants in Common
These options sound similar but can have very different outcomes if one of the owners dies.
If two or more people own a property as joint tenants, it means that all owners together own 100% of the property. Each owner does not have a respective share. If one owner dies, then the right of survivorship will apply. This means that the property will automatically pass by law to the surviving owner(s) in full, and the surviving owners will then continue to own 100% of the property.
The surviving owner(s) will then be able to treat the property as their own or dispose of it as they wish. On the death of the last surviving owner, the property would pass in accordance with that owner’s Will, or by the laws of intestacy if the owner dies without leaving a Will.
Tenants in Common
If two or more people own a property as tenants in common, those people will each have respective shares in the property – for example 50/50 or 30/70. These percentage shares can often reflect how much money each person put in to buying the property, or an inherited share. If one owner dies, their percentage share would not automatically pass to any of the surviving owners. Instead, the share would pass in accordance with that owner’s Will if they have made one, or by the laws of intestacy if they haven’t.
For example, if John & Jane owned a property as tenants in common in 50/50 shares, and Jane died leaving her 50% to her son Joe, then John would continue to own his 50% share, and Joe would own the remaining 50% share that Jane had left to him in her Will.
Which should I choose?
Traditionally, spouses wished to own their property as joint tenants. This meant that on the death of the first of them, the entire property would pass to the survivor. The survivor’s Will may then leave the property to their children for example. This ensured that each spouse could own 100% of the property before it passed down to a different beneficiary.
More complex family arrangements may mean that owning as joint tenants is now not as suitable for some spouses or unmarried couples. This could be because, for example, they have children from a previous relationship, and they do not wish to leave their property to their spouse/partner, who may not then benefit the child who is not a blood relative.
It is more common that friends or business partners would own property as tenants in common, so that their shares pass under their Will rather than to the co-owner(s).
The way in which you hold a property can also have a big impact on care fee planning, and how to protect your assets for future generations. It is important to look at your ownership of your home and assets and to structure your Will accordingly, so that it achieves your wishes.
Can I change the way I hold my property?
Yes! If you have already bought or inherited property, it is not too late to change the way you hold it. A property held as joint tenants can be ‘severed’ and changed to tenants in common whereby you can specify the shares you wish to hold.
Does the way I hold my property make it harder for my family to administer my estate?
Owning a property as joint tenants is simple because it passes to the survivor automatically by law. If a property is owned in your sole name or if you own as tenants in common, then it is likely that a ‘Grant of Probate’ will be needed to deal with the property. Don’t let this stop you though, as a Grant of Probate is easily obtained and will often be necessary anyway if you have savings in bank accounts or shares in your sole name.
Next steps – How can we help?
Your circumstances are specific to you, and therefore Hatchers recommend that you take professional advice and review your Wills when buying or inheriting property, to ensure that your assets will pass in accordance with your wishes.
Hatchers can also assist with obtaining a Grant of Probate to deal with property and assets once a person has died, or provide advice on the steps needed to administer an estate.
If specific advice on all aspects of Wills, probate, estate planning or estate administration is required, please contact our offices in Shrewsbury 01743 248545, Harlescott 01743 467641 or Whitchurch 01948 663361.