Ownership of your property...
What is the difference between holding ownership of your property as joint tenants and tenants in common?
It is a fairly straightforward concept to understand but the potential reasons why owners decide to hold their property as tenants in common can become complicated, so I will simply deal with the differences.
Joint Tenancy
A property held between a husband and wife as joint tenants means that on the death of the first spouse, the property automatically transfers to the surviving spouse.
Tenancy in Common
A property held between husband and wife means that on the death of the first spouse, the property does not automatically transfer to the surviving spouse. Instead, the share of the property will pass in accordance with the deceased's Will.
There are numerous reasons why a tenancy in common is preferred to a joint tenancy, mainly due to Inheritance Tax and/or long term care costs. In 2007, the government changed Inheritance Tax rules - mainly because couples (married or civil partners) were severing their joint tenancies at the Land Registry and registering their interests as a tenancy in common.
The Inheritance Tax changes meant that this was no longer necessary as married couples and couples in a Civil Partnership could transfer their Inheritance Tax allowance upon death to their partner.
This change does not however extend to unmarried but cohabiting partners and therefore, people falling into this category may still consider the benefits of a tenancy in common.
It is highly recommended if you are considering severing your joint tenancy that you contact a Solicitor to assist you. Whilst it is a relatively simple procedure, it is always advisable to have a trust set up to avoid any child/beneficiary forcing the sale of the property is your partner passes away. A trust can also assist in avoiding long-term care costs.
Richard Howlett is a solicitor at Selachii in London 02077925649.
