How you own your home can make a significant difference to what happens to it when one owner dies. Understanding the difference between Joint Tenants and Tenants in Common can help you make informed decisions about your property and inheritance.
Understanding joint property ownership
When two or more people own a property together, there are two main ways to hold the legal ownership: Joint Tenants or Tenants in Common.
Although both arrangements allow people to own a property together, they work differently when it comes to inheritance, Wills and what happens if one owner passes away.
Choosing the right arrangement is important, particularly if you want your share of the property to pass to specific family members or beneficiaries.
What does owning a property as Joint Tenants mean?
Joint Tenants is a common arrangement for couples buying a home together.
With this type of ownership:
All owners hold the property together rather than owning separate defined shares.
Each owner has equal rights to the property.
When one owner dies, their interest automatically passes to the surviving owner through the right of survivorship.
You cannot leave your interest in the property to someone else through your Will.
The automatic transfer to the surviving owner is known as the right of survivorship.
For many couples, this arrangement is suitable. However, it can create difficulties if you want your share of the property to pass to children, other relatives or someone outside the surviving ownership.
For example, if a married couple own their home as Joint Tenants, the surviving spouse will normally become the sole owner when the first spouse dies. The deceased person’s Will cannot override this automatic transfer.
What does owning a property as Tenants in Common mean?
Tenants in Common is different because each owner has a separate share in the property.
These shares do not have to be equal. For example, one person could own 40% and the other 60%, or they could each own 50%.
With this arrangement:
Each owner has a defined share of the property.
The shares can be equal or unequal.
When one owner dies, their share does not automatically pass to the other owner.
Each owner can leave their share to chosen beneficiaries through their Will.
This gives property owners more control over what happens to their share after death.
For example, a couple who own their home as Tenants in Common could arrange for the first person’s share to pass into a Will Trust for the benefit of the surviving partner, while preserving the intended inheritance for their children.
The exact arrangements would depend on the terms of the Will and Trust.
Changing from Joint Tenants to Tenants in Common
If you currently own your property as Joint Tenants but want to leave your share to someone else, you may wish to consider changing the ownership to Tenants in Common.
The legal process is called a severance of joint tenancy.
This can be carried out jointly by the owners or, in England and Wales, by one owner acting alone, provided the correct legal notice is served on the other owner.
Once the severance has taken effect, the property is held as Tenants in Common. The owners will generally hold equal shares unless a different arrangement applies.
A severance can be particularly relevant when reviewing your estate plan, going through a separation or considering how your property should be inherited.
It is important to understand that severing a joint tenancy does not itself transfer the property or create a Will. You should also review your Will to make sure it reflects your wishes.
Why might Tenants in Common be beneficial?
There are several reasons why property owners consider holding their home as Tenants in Common.
During your lifetime
Having a defined share can give you greater control over how your interest in the property is dealt with.
It may also be relevant when planning for the possibility that one owner will need long-term care.
However, changing to Tenants in Common does not automatically protect a property share from care fees. Local authorities consider individual circumstances and may investigate transfers or arrangements made to avoid care charges. The treatment of a property interest depends on the facts and the applicable financial assessment rules.
You should therefore avoid assuming that severance alone will prevent a property share from being considered in a care-fees assessment.
After the first death
One of the main advantages of Tenants in Common is that each owner can decide who should inherit their share.
This can be particularly important for couples who have children from previous relationships or who want to ensure that their wider family benefits from their estate.
Without suitable planning, the surviving owner may eventually decide to leave the whole property to someone else. A carefully prepared Will and, where appropriate, a Will Trust can help address this concern.
If your circumstances change
Your wishes may change over time.
You may separate from a partner, remarry, have children or decide that you want your property to pass to different beneficiaries.
Holding property as Tenants in Common can provide greater flexibility when reviewing your inheritance arrangements.
The importance of Wills and Trusts
Changing your ownership to Tenants in Common is only one part of planning what happens to your property.
You should also consider whether your Will needs updating. If you want your share to pass to particular people, your Will should clearly explain your wishes.
A Will Trust may also be appropriate in some circumstances.
Will Trusts
A Will Trust can be created through your Will and takes effect after your death.
For example, a properly drafted life interest trust may allow your surviving partner to continue living in the property or benefit from it during their lifetime, while protecting the eventual inheritance for your chosen beneficiaries.
Depending on its terms, this may help ensure that the property share is not simply inherited outright by the surviving partner.
It is important to understand that the protection offered depends on the trust’s wording, the circumstances and the relevant legal rules. It cannot guarantee that assets will be protected from every future claim or care-fees assessment.
Lifetime Trusts
A Lifetime Trust is established while you are alive.
In some circumstances, an owner may consider transferring an eligible property interest into a trust as part of wider estate planning. However, this is a significant legal and financial decision.
A Lifetime Trust does not automatically protect a property from care fees, inheritance tax or other claims. The consequences depend on the type of trust, how it is established, the owner’s circumstances and the timing and purpose of the transfer.
You should obtain independent advice before transferring property into a trust.
How Viva Planning can help
Understanding how your property is owned is an important starting point for protecting your home and planning your inheritance.
At Viva Planning, we can help you understand the difference between Joint Tenants and Tenants in Common and explain the options available for your circumstances.
This may include reviewing your current ownership, explaining the process of severing a joint tenancy and helping you consider whether your Will or wider estate-planning arrangements need updating.
The right approach will depend on your family circumstances, your wishes and your financial position.
Taking time to review your property ownership now can help you make clearer decisions about who should benefit from your home in the future.
