For many couples, the family home is their largest asset, yet the way it is owned may not have been discussed since the day they bought it. Ask someone whether they own their house jointly with their husband, wife or partner and they will probably say yes. Ask whether they own it as Joint Tenants or Tenants in Common and the answer is often less certain.
The distinction is important because it affects what happens to the property when one of the owners dies. In some cases, the deceased person’s interest passes automatically to the surviving owner. In others, their share can pass under their Will.
It is quite possible to have a valid, professionally prepared Will that says one thing about your estate while the ownership of your home means something different happens to the property. Understanding how the two fit together is an important part of estate planning.
Joint Tenants and the right of survivorship
If two people own their home as Joint Tenants, they own the beneficial interest in the property jointly rather than having separate defined shares.
When one of them dies, the deceased owner’s interest passes automatically to the surviving Joint Tenant. This is known as the right of survivorship.
For example, a husband and wife may own their home as Joint Tenants and have Wills leaving their estates to their children. If the husband dies first, his interest in the jointly owned home will normally pass automatically to his wife. The provision for the children in his Will does not redirect his interest in the house to them because the beneficial joint tenancy determines what happens to it.
This is sometimes unexpected. People quite reasonably assume that their Will controls everything they own when they die, but some assets can pass outside the Will. A property held as Joint Tenants is an important example.
What changes if you are Tenants in Common?
Tenants in Common hold separate beneficial shares in a property. These might be equal shares, although there is no requirement for them to be.
If you own 50% of a property as a Tenant in Common, your 50% does not automatically become the property of the other owner when you die. It can instead pass according to the terms of your Will. Where there is no valid Will, the intestacy rules will determine who inherits it.
This gives people more scope to decide what should eventually happen to their share of a home.
That does not necessarily mean leaving it directly to somebody else on death. A married couple with children, for example, might want the survivor to continue living in the house while also wanting the first person’s share eventually to pass to the children. Appropriate trust provisions within a Will can sometimes be used to achieve that.
The important thing is that the property ownership and the Will have been considered together. Changing the ownership to Tenants in Common without considering what the Will says about that share only deals with part of the picture.
Why might someone choose Tenants in Common?
There are plenty of circumstances where owning distinct shares can make sense.
Blended families are a common example. Someone who has children from a previous relationship may want their new husband or wife to have the security of remaining in the family home but still want their own share of the property ultimately to pass to their children.
There can also be reasons which have nothing to do with remarriage. Two owners may have contributed different amounts towards a property and agreed unequal beneficial shares, or they may simply want the freedom to decide separately who should inherit their respective interests.
Neither form of ownership is automatically better. What matters is whether the arrangement matches what the owners want to happen.
Can you change from Joint Tenants to Tenants in Common?
A beneficial joint tenancy can be severed so that the owners hold the property as Tenants in Common. GOV.UK refers to this as severance of the joint tenancy.
This is sometimes done as part of estate planning, although it can also become relevant following a separation or divorce.
Severance does not transfer your share to your children or put it into a trust. It changes the nature of the beneficial ownership so that you have a distinct share capable of passing under your Will.
The Will then needs to say what should happen to that share.
It is possible to change in the other direction too, from Tenants in Common to Joint Tenants, although the requirements are different and all of the joint owners need to agree.
Any change to property ownership deserves proper consideration. There may be wider legal, financial or tax consequences depending on the circumstances, so it should not be treated simply as an administrative amendment to the Land Registry record.
How can I find out how my property is owned?
This is worth checking if you are unsure.
People sometimes download their title register expecting to find the words “Joint Tenants” or “Tenants in Common” written next to their names. The register does not work quite like that.
Where a Form A restriction appears on the register, it can indicate that the beneficial ownership is held in shares. However, HM Land Registry itself cautions that the presence of the restriction does not always provide a complete answer about the beneficial ownership. Other documents, such as the original transfer or a declaration of trust, may also need to be considered.
If you bought the property a long time ago and cannot remember what was agreed, there is no need to guess. The ownership can be checked before making decisions about your Will.
What if you are not married to the person you own the house with?
For unmarried couples, checking the ownership can be particularly important.
There is still a widespread assumption that living together for a long time creates inheritance rights similar to marriage. It does not.
If an unmarried couple own their home as Joint Tenants, the deceased person’s interest will normally pass automatically to the surviving owner because of the way the property is held.
If they are Tenants in Common, the deceased person’s share does not automatically pass to their partner. Their Will determines who inherits that share or, if there is no valid Will, the intestacy rules apply.
This can produce a result that neither partner expected. Someone may assume their partner will simply inherit their half of the house because they have lived together for twenty years, while their actual ownership and Will arrangements say otherwise.
For unmarried homeowners in particular, the Will and the property ownership should be looked at together.
What happens to the mortgage?
Joint ownership also needs to be considered alongside any borrowing secured against the property.
A mortgage does not disappear when one of the owners dies. The lender’s charge remains against the property and the mortgage arrangements will need to be dealt with as part of what happens next.
Some homeowners have life insurance intended to repay all or part of the mortgage on death. Others do not. If the surviving owner would struggle to meet the borrowing alone, that can be just as important to the estate planning conversation as deciding who should eventually inherit the property.
A house may be worth £400,000 on paper, but if there is still a substantial mortgage outstanding, it is the overall financial position that matters.
Where do Property Protection Trusts fit in?
People often first encounter the distinction between Joint Tenants and Tenants in Common when discussing Property Protection Trusts.
A common objective is to allow a surviving husband, wife or partner to continue benefiting from the family home while preserving the deceased person’s share for chosen beneficiaries, often their children.
For a Will-based Property Protection Trust to deal with a person’s share of a jointly owned home, that person needs to have a distinct beneficial share capable of passing under the Will. This is why severing a Joint Tenancy and owning as Tenants in Common may form part of the planning.
The trust itself is contained within the Will and only comes into effect following death. Changing the property ownership and putting the appropriate Will provisions in place are therefore connected parts of the same planning exercise.
We have covered Property Protection Trusts separately on our website for anyone who wants to understand how those arrangements work in more detail.
When is it worth checking your property ownership?
If you have recently bought a property, you may know exactly how it is owned. Ten or twenty years later, it is surprisingly easy to forget.
A review is particularly worthwhile when family circumstances change. Marriage, separation, divorce, remarriage and the arrival of children or grandchildren can all alter what somebody wants to happen to their estate.
It is also sensible to check when making or reviewing a Will. There is little value in carefully setting out who should inherit your estate without establishing whether your largest asset will actually pass under the Will.
At AHJ Wills & Estates, we help individuals and families across Sheffield, Rotherham and the surrounding areas with their Wills and estate planning. As part of that conversation, we can consider how the ownership of your home fits with what you want to happen after your death.
If you do not know whether you own your home as Joint Tenants or Tenants in Common, that is a useful thing to establish before deciding whether your current Will still does what you expect it to do.
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