Home ownership and your Will

Real estate is one of the most valuable assets people own during their lifetime. Property owners may not realise that whether or not real estate passes to the beneficiaries named in their Will depends on the type of ownership.

Sole Ownership, Joint Tenants or Tenants In Common?

There are different ways to be the legal owner of a property asset. Each form of ownership has a different implication when it comes to deceased estates, so it is important to understand which applies to you.

Sole ownership means the property is exclusively owned by a single person and no other person has any interest in the property asset. If the deceased person was the sole owner of the property, the asset usually forms part of the estate for distribution in accordance with the Will (if there is one).

There are two ways of holding joint property. Where two or more people own property, they can hold it jointly as joint tenants or as tenants-in-common. The mode of ownership is significant and dictates what happens to the property on the death of one of the joint owners.

joint tenancy is the more common form of ownership and can be thought of as similar to a joint bank account. Ownership as tenants in common can be with two or more people and in equal or unequal shares.

Property Ownership as Joint Tenants

Joint tenancy comes with the ‘right of survivorship’. Owning a property as joint tenants means that when one joint owner dies, their interest in the home passes to the surviving joint owner, irrespective of what is in the deceased person’s Will. The deceased person’s share is not included in the deceased estate for distribution to beneficiaries.

The property will usually transfer to the surviving joint tenant without having to go through the courts. A copy of the death certificate is generally required as proof of the death.

Property Ownership as Tenants in Common

If the deceased person owned a property with someone (e.g. a spouse, partner, or someone else) as ‘tenants in common’, each owner (or ‘tenant’) owns a portion of the property asset. The ownership need not be in equal shares – it can be split any way the tenants in common agreed on when they purchased the property.

What happens to deceased estate when a tenant in common dies?

If a property is owned as tenants-in-common, there is no right of survivorship. If one of the joint owners dies their share of the property does not automatically go to the surviving owner. The deceased owner’s share of the property becomes an asset of their deceased estate for distribution in accordance with their Will (or if the person has no Will, as per the laws of intestacy).

What if joint owners’ circumstances change?

Owning property as joint tenants may be preferable for many people. However, difficulties can arise if circumstances change. For example, in the event of a relationship breakdown, a joint tenant may no longer want their share of the property to pass automatically to their estranged spouse or partner on their death.

 Can ownership be changed from joint tenants to tenants-in-common?

It is possible to apply to NSWLRS to have the ownership changed from joint tenants to tenants-in-common without the consent of the other property owner(s). Once registered at NSWLRS, a new certificate of title will be issued showing the registered owners as tenants in common (expressed in parts such as “1/2”).

There is a risk in that a person may believe their property will pass according to their Will, but in reality it may not. If you are in doubt about the mode of holding for any jointly owned property you have, and want to confirm what implications this has on your Will, seek advice by calling Anthony Steel on 0451 118 644.

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