In 2007 the Chancellor of Exchequer changed the law so that it became easy for married couples to transfer their Nil Rate Band (NRB) to each other on the first death.
There are distinct advantages in having the property held as Joint Tenants and/or Tenants in Common.
Property ownership is registered with the land registry and you can own your property as either :-
- Beneficial Joint Tenants (or as)
- Tenants in common.
Tenants in Common
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. Normally 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.
Joint Tenants
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 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. A Will cannot alter the ownership of the property held on a Joint Tenants basis. A Will made by a Joint Tenant, which tries to leave the property to anyone other than another legal Joint Tenant would be ineffective.
Can this 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 the 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.
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. A Joint Tenant cannot gift their share of the property.
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 Solicitor.
Please contact me on [email protected] or 0207 041 6069 to find out how I can best help you protect your family and your assets.