Published on: 3rd January 2017

Do you own a property?

When you purchase a property and your conveyancer registers it with the Land Registry, you can often choose how you would like to own it. There are three common ways of owning a house:

Sole Owner Joint Tenants Tenants In Common

If you are Joint Tenants, you own the property jointly with another person or people and if one of you dies, the property will pass by survivorship to the surviving person or people.

If you own a property as Tenants In Common, you and the other owners on the title each own a specific share of the property. Usually each owner has an equal share but this is not always the case. If, for example, one person put in 60% of the funds to buy the property then it can be owned in a 60% / 40% ratio.

How you own your property can have a substantial impact on what happens when you die. A property owned jointly will pass outside of your estate; therefore if you leave a testamentary gift of your share in the property to somebody other than the co-owner(s) the gift will fail. You are unable to control who will receive your share and interest in the property and cannot protect your share from sideways inheritance.

However, if you own the property as Tenants In Common, upon first death your share does not automatically pass to the surviving owner(s) but instead will pass to whomever you have gifted your share to in your Will. Owning your house as Tenants in Common also allows you the opportunity to protect your share and interest between your death and the survivor's death by putting your share into trust.

Tenants In Common is particularly relevant if the surviving spouse remarries. If you own your house as joint tenants, when you pass away your share will pass to the survivor where upon their death, it could be distributed to their new spouse and family. By owning the property as Tenants In Common, you are able to better protect your share and interest in the property for your beneficiaries by means of a Will and / or a trust.

Another advantage of Tenants In Common is protecting your estate against potential care fees assessment. Furthermore, in certain circumstances, you may also be able to minimise the inheritance tax payable on your estate.

To find out more about the benefits of becoming Tenants In Common please contact us here to arrange an appointment with one of our Consultants.

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