As the author Mark Twain once said: “Buy land. They’re not making it anymore.” It's an amusingly true investment tip and an indication that your most valuable asset is likely to be your home.
But what happens to the legal ownership of your house or real estate asset when you die? This depends on a combination of:
You should be aware that owning property solely, as a joint-tenant or as a tenant-in-common each has different implications for your Will and estate plan.
We look at the different types of legal ownership and how they affect the way that property passes to your Beneficiaries under your Will.
Sole ownership of property
When a Will maker is sole owner of the home, there are no barriers to ownership passing to any or all of their Beneficiaries under their Will.
But what many people don’t realise is that property does not automatically pass to the Beneficiaries in a Will in every instance.
Owning property as joint-tenants
In fact, the most common home ownership model in Australia is where spouses or partners own as joint-tenants, and in this case full ownership will automatically pass to the surviving joint-tenant when one of them dies.
Owning property as tenants-in-common
Real estate can also be held jointly by two or more people as tenants-in-common. This is where each of the property holders owns a specified “share” in the property. In this case, the share held by each person can be passed to their Beneficiaries in a Will.
It’s important to consider legal title in property when it comes to estate planning. Each type of ownership will lead to a different result for your Beneficiaries and it’s worth thinking about what sort of outcome you’d like to achieve.
Owning property assets as joint-tenants can make good “estate planning sense” as they bypass the Will and go straight to the surviving owner, making estate administration easier and avoiding any claims that might arise under the estate after death.
But while joint-tenancy is suitable and even preferable for many people, problems can arise if your relationship changes and you no longer want your share of the property to pass automatically to your estranged spouse or partner.
If you own your home as a sole owner or a tenant-in-common, your Will needs to clear on who should inherit the property or your share in it.
The best way to ensure your wishes for passing on personal property are carried out is to make arrangements in your Will, regardless of the type of legal ownership you hold for your home and other property assets.
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