Joint tenants or tenants in common; which is best for me?

Owning a property comes with many considerations; one of them being whether you own your property as tenants in common or as joint tenants.  Jane Cox, Private Client Partner, explains here the difference between the two statuses, and why they are important when considering your plans for the future.

Owning a property as tenants in common

As tenants in common, you can own equal or different shares of the property, for example if one of you has contributed more money to the property than the other you may wish to own shares reflecting the different contributions.  The property will not automatically pass to your co-owner when you pass away but can be distributed according to your Will or, if you do not have one, under the Rules of Intestacy. 

“If you own your property as tenants in common because you wish to own different shares in the property, we would always advise that you have a Declaration of Trust,” begins Jane.  “This is a legal document that clarifies the contributions of both parties, or indeed of your parents if they have contributed towards the purchase, and so can be a means of recovering any monies due to you should the relationship fail.”

Owning a property as joint tenants

As joint tenants, you would own your property equally with the other person.  The main difference between joint tenants and tenants in common is that the property would automatically go to the other owner when you pass away as joint tenants.  This means that you cannot pass on your ownership to another person in your Will or under Rules of Intestacy. 

Severing the joint tenancy

There are a variety of reasons as to why you may wish to change from one status to another; you may be divorcing or separating and do not wish your co-owner to automatically inherit your share of the property, or you may in fact be getting married and wish to own the property jointly with your new spouse.

“The main reason we see couples changing is for future planning in their Wills, perhaps to protect their children’s inheritance or against care home fees,” explains Jane.  “If this is the case, you would need to sever your tenant tenancy and refer to tenants in common.  It is crucial however that once this is done, you make a Will to reflect your wishes accordingly.”

Severing the joint tenancy can be done with or without the other person’s co-operation; however it is advised that the other person is in agreement as without it may cause delays.  A Notice of Severance would be served to the co-owner, who would then sign and return it.  This is then sent to the Land Registry so that a Restriction can be entered against the title, confirming that the property is now owned as tenants in common. 

What is a Life Interest Trust Will?

Severing the joint tenancy allows you to set up a Life Interest Trust Will, a Will made popular for its ability to protect your share of your property.  A Will of this nature means that upon your death, your surviving spouse can remain in the property with your share moving into a trust.  This is then ring-fenced for your children in the event that your survivor remarries or has more children, and can also protect it against being taken into consideration for care home fees in the future. 

“The way you own your property is incredibly important when planning for your future,” concludes Jane.  “Seeking the correct advice at the time of purchase can help make things clearer and you can review which option may be best for you.  It is always recommended that you seek legal advice when you are making a Will, as we can discuss with you the variety of Wills and plans that would be most beneficial for yours and your family’s future.”

For more details on how to sever your joint tenancy or on how to make a Life Interest Trust Will, contact Jane or the team on 01329 222075 or email privateclientenquiry@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.