There can be occasions when making a will may not be sufficient to ensure that your wishes are adhered to on your death. This particularly applies in the case of a jointly owned property which is held by two or more persons as Joint Tenants.
What is meant by Joint Tenants?
Where two or more people own a property jointly, they can hold the property either as Tenants in Common or as Joint Tenants. Joint Tenants means that all the joint owners have an equal share and if one of the owners were to die, it automatically passes to the survivor(s) irrespective of what is put in their will. If a property is held by joint owners as Tenants in Common, it is not necessarily the case that their shares will be equal and furthermore, on the death of one of the joint owners, that person’s share will not automatically pass to the survivor(s). That person’s share will pass according to their will or if there isn’t a will, according to the intestacy rules.
When is a property usually held by the owners as Tenants in Common?
Joint owners often hold properties as Tenants in Common when the assets are held by business partners or by family members such as siblings. It is usually held by the owners as Joint Tenants where the parties are married or in a serious relationship.
When might it cause problems if the property is held as Joint Tenants?
These are some of the situations where it can cause a problem:
- If the joint owners were in a relationship but have now split up or are about to split up.
- If one of the owners has dementia and has gone, or there is a prospect of them going, into a care home, the joint owner who still has capacity may not want his or her interest in the property to pass to the other one. This is because that person’s half share may end up being used to pay towards care home fees.
- If the joint owners have children from previous relationships, they may wish to preserve their interest in the jointly owned property as inheritance for their children. This can also occur where the parties share the same children but fear that on the death of the first of them, the other may re-marry and there is a risk of the survivor leaving their interest in the property to their new family.
What are the consequences if the property remains held as Joint Tenants at the time of your death?
It is quite clear that even if you leave your half interest in the property to someone other than the other joint owner in your will, your interest in the property will still pass to the survivor and not the person(s) you specify in your will. This is because the Joint Tenancy takes priority over your will.
What can you do about it? The answer is to sever the Joint Tenancy, thereby converting the joint ownership from Joint Tenancy into Tenancy in Common.
How do you sever the Joint Tenancy?
One of the options is for both the joint owners to sign a mutual notice of severance of the Joint Tenancy. This is a legal document which both the joint owners must sign. This frequently happens where you have a husband and wife making mirror wills and at the same time, they sign a mutual notice of severance of the Joint Tenancy, thereby converting the property into Tenants in Common. This is particularly common where a life interest trust is created in a will. This is a type of trust which allows the surviving partner to continue to occupy the property, usually for the rest of their life, but on their death, to pass on their share to someone else such as a child or children.
Another option is where one of the joint owners serves a notice of severance on the other. This needs to be done effectively otherwise it may not work. It is best to have a solicitor assisting you to make sure that the service of the notice is effective.
In each case, if the property is registered land, you should also lodge a copy of the document severing the Joint Tenancy with the Land Registry. At the same time, a Land Registry form SEV should also be lodged to ensure that there is an appropriate Tenancy in Common restriction recorded at the Land Registry which means that the survivor cannot sell the property on their own.
Summary
If the property is held by the owners as Joint Tenants, where a joint owner decides that they do not want their interest in the jointly owned property to pass to the other on their death, it is essential that they sever the joint tenancy. It is usually best to do this in conjunction with making a will. This is vital to ensure that your wishes are followed.
One of the real dangers of making a homemade will, or not getting advice from a solicitor experienced in the area, is that the need to sever the joint tenancy may be missed, causing your wishes to be unfulfilled. I have for instance, seen cases of homemade wills being made leaving a share in the property to the deceased’s children and instead, their half interest has passed under the rules of survivorship to the surviving spouse who is in a care home, as the joint tenancy had not been severed. This means that the whole of the house, on the death of the first of them, will be taken into consideration when assessing the means of the survivor and the property has been lost as an inheritance for the children.
It is still possible to sever the Joint Tenancy when one of the owners is suffering with dementia. However, it is also essential that legal advice is obtained to ensure that this is done effectively.
For these reasons, it is important to obtain specialist advice when making a will. A specialist solicitor will advise you on all your options.
To speak with a specialist solicitor, call Winston Solicitors on 0113 320 5000 or email mkv@winstonsolicitors.co.uk
