Property ownership can become particularly important when someone dies.
A common misconception is that a person's share of jointly owned property will always pass according to their will. That depends on how the property is owned.
In England and Wales, property can generally be held as joint tenants or tenants in common.
What happens if you are joint tenants?
When property is owned as joint tenants, the owners have equal rights to the whole property.
GOV.UK explains that when one joint tenant dies, the property automatically passes to the surviving owner or owners. A joint tenant therefore cannot normally use their will to leave their interest in the property to someone else.This is known as the right of survivorship.
What happens if you are tenants in common?
Tenants in common own separate shares in the property.
Those shares can potentially pass under the owner's will rather than automatically passing to the surviving owner.
For example, two people might own a property as tenants in common in equal shares. If one dies, their share may pass to the beneficiary named in their will, subject to the terms of the will and the wider legal circumstances.
Why does the distinction matter?
The difference can have major consequences for estate planning.
A person might believe they are leaving their home to their children through their will, only to discover that the property is jointly owned in a way that causes the surviving owner to receive it automatically.
This is why property ownership should be reviewed alongside a will.
Can ownership be changed?
In some circumstances, joint owners may be able to change how they hold a property.
However, changing the ownership structure can have legal, financial and tax consequences.
It is therefore important to understand the existing title and beneficial ownership before making changes.
What happens during probate?
The treatment of jointly owned property can affect the estate's value and the assets that personal representatives need to administer.
If the property passes automatically to a surviving joint owner, it may not form part of the estate in the same way as an asset that passes under the will. However, property ownership can have wider Inheritance Tax implications, so the overall circumstances need to be considered.
Conclusion
If you own property jointly, do not assume that your will alone determines what happens to your share when you die.
Understanding whether you are joint tenants or tenants in common is an important part of estate planning.
GOV.UK recommends seeking legal advice where property ownership arrangements are complicated.