Tenants In Common Versus Joint Tenants
Choose Your Tenancy Status Carefully
During the course of a normal working week, I often find myself explaining the difference between Joint Tenants and Tenants in Common, to customers looking to make a Will. Below I will outline the key differences and how this can affect your Will.
When you purchase your property or remortgage an existing property. Conveyance work is done either by a conveyancing company or a solicitor. If you are a married couple or jointly own your property with a partner, you would have been asked on which basis you wish to own your property.
Property ownership is registered with the land registry and you can own your property as either:-
- Beneficial Joint Tenants ( Or )
- Tenants in common.
Tenants in Common Explained
Owning property as tenants in common means you jointly own the property but as co-owners you are regarded in law as having separate shares. Often the shares are held on a 50/50 basis, but if one person is putting more of their money in than the other, the shares can be more specific. In the event of the death of a Tenant-in-Common, their share of the property passes to the beneficiary in their will.
Beneficial Joint Tenants Explained
Owning your property as beneficial joint tenants means the property belongs to you and the other owner or owners jointly. There is no separate distinction between tenants You must all act together as a single owner.
You will not own any specific shares in the property and you cannot give away a share of the property in your Will. In the event of the death of one of the joint tenants, legally your interest in the property automatically passes to the surviving owner or owners.
Often this is the form of ownership is chosen by married couples or civil partners, where these parties are content for the survivor to be the absolute owner. The ownership of the property held on a Joint Tenants basis cannot be altered by a Will. A Will made by a Joint Tenant, which tries to leave the property to anyone other than another legal Joint Tenant would be ineffective.
How does it affect my will?
If two people own a property as “joint tenants” and one of them dies, the other will automatically become the owner of the whole property. Regardless of any requests or wishes laid out in the deceased owner’s Will.
On the flip side if two people own their property as “tenants in common”, each person only owns a share in the home. When one tenant in common dies, their share will pass into their estate and be dealt with by the personal representatives. If a Will has been put in place this would be their chosen Executors, If no Will is in place then the rules of intestacy would apply.
Tenants In Common Versus Joint Tenants – Summary
“Joint tenants” is common between most married couples where there is not an advantage to defining separate shares in a property and where they would want the property to automatically pass to the surviving spouse.
“Tenants in common” is often used to ensure that one half of a married couple can pass on their share to their children. While the other person can continue living in the property, passing on their remaining half only on their death.
Often “Tenants in Common” is used for Inheritance Tax planning and can also be used to prevent having to sell your home if you need to go into long-term care. And is also a way for couples to protect their share in case of separation or divorce.
A Tenant in Common can gift their share of the property in their Will. Whilst a Joint Tenant cannot.
What are the main benefits of owning property on a Tenants in Common basis?
- Protect your children’s and your bloodlines future inheritance in the event that the surviving partner should remarry.
- It can help protect you from paying long-term care home fees.
- Your wishes for your property are written into your Will so only you can change it. (more control as life changes)
- It can help protect you from inheritance tax.
Changing ownership from Beneficial Joint Tenants to Tenants in Common
Often referred to as “Deed of Severance” or “‘severance of the joint tenancy’ this is normally done by one of the owners by serving notice of severance on the other(s). Or by a new or amended trust deed entered into by all the owners. If you want to sever your joint tenancy, you must apply to the Land Registry using form SEV. This application can be made by all of you or by one of you. The application form must be signed by the applicant(s) or their conveyancer.