Modern couples’ guide to joint tenancy

WRITTEN BY David Toole

Joint tenancy has long been the norm for couples owning assets together. But many are unaware that another form of ownership – tenancy in common – may better suit their needs. This article explores the benefits and possible drawbacks of this lesser known form of ownership.  For the modern couple more closely resembling the Brady Bunch than the Flintstones, tenancy in common may be the answer.

What’s the main difference between joint tenancy and tenancy in common?

Joint tenancy and tenancy in common are forms of asset co-ownership, typically written into legal contracts pertaining to home ownership. The key difference between the two is their effect on the distribution of assets at the death of one of the partners. Joint tenancy is governed by the rule of survivorship. This means that at a partner’s death, their share of any joint assets become the sole property of the surviving partner.  Tenancy in common, on the other hand, sees asset shares distributed according to the terms of each partner’s will.

In what situations is tenancy in common preferable?

Tenancy in common may be preferable where couples wish to bequeath their share of assets in different ways.  In a recent example, Re Wilson, a husband (Leonard) and wife (Austral) initially owned their assets as joint tenants. Austral’s will set out her wishes for the distribution of her assets, but she was subsequently diagnosed with dementia and sadly lost the capacity to alter her will. Leonard, assuming on the basis of her diagnosis that she would predecease him, severed their joint tenancy in favour of tenancy in common to ensure his wife’s wishes would come to fruition.  Without this action, Austral’s assets on her passing would move to her surviving partner and hence not be distributed according to how she hoped.  It was a twist of fate that Leonard passed away first, however his actions ensured both partners’ dying wishes were taken care of.

When may joint tenancy be preferable?

Where tenancy in common provides flexibility, joint tenancy provides simplicity.  If both partners have identical wishes for the distribution of their assets, then joint tenancy is likely to simplify administration of the estate. No matter who passes first, the assets will be distributed in exactly the same way (provided, of course, that the surviving partner does not then change the terms of their will).

Ensuring your tenancy arrangements are in order

Ensuring your affairs are in order can be as simple as considering these two questions:

  1. Do you and your partner have identical wishes regarding the distribution of your assets?
  2. Will your assets be distributed in accordance with your wishes if you die before your partner?

Adapted by Reuben Owusu from the original article by David Toole titled Severing joint tenancies: Getting it right can make all the difference.

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If you answered no to either or both of the above then it may be worth getting in touch with our Estates & Estate Planning team to discuss severing your joint tenancy in favour of tenancy in common.

For more information get in touch with our Wills & Estates Team.

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