Property ownership: joint tenants vs tenants in common

When it comes to the things that we own, our homes might be considered as one of the most important. Along with sentimental value, properties hold a great amount of economic capital that can have important implications for your Will and estate plan – depending on how the property is held.

People often buy property together, so you might be wondering how that may or may not form part of your estate when you die. If you buy a property with another person, it will generally be held by you in one of two ways: joint tenants or tenants in common.

Joint tenants

The most common manner of home ownership in Australia tends to be where spouses or partners own property as joint tenants.

If you own a property as a joint tenant with someone else, this means:

• both of you have equal ownership of the property;

• when you pass away, your ownership of the property is automatically transferred to the surviving joint tenant(s);

• as such, the property cannot be gifted in your Will when you pass away; and

• you don’t need Probate to transfer a joint property

As joint tenants, you can’t dispose of your share in the property in your Will unless you’re the last surviving joint owner. In the event that you’re the last surviving joint owner, the entire property will form part of your estate.

Tenants in common

Property can also be co-owned by two or more people in a manner known as tenants in common. As each property owner holds their own specific share of the property, that share of the property can be passed to your beneficiaries in your Will.

If you own a property as tenants in common, this means:

• two or more people co-own a distinct share of the property in their own name;

• your share in the property can be dealt with separately at any time; and

• the percentage share you have in the property forms part of your estate when you die

As tenants in common, each party’s interests are protected. With more variables in ownership, the different shares in the property can reflect whether or not someone owns a smaller portion.

Implications for estate planning

When it comes to estate planning, it’s important to consider legal title in property. Each type of ownership will result in a different outcome for your beneficiaries, so you might need to think about what you’d like to happen.

Co-owning property as joint tenants might be the preferred option for you because it goes directly to the surviving owner, making estate administration easier and making it more difficult for claims on your Estate after you’ve passed away. However, if your relationship changes, you might be in a situation where the property is automatically passed to your estranged spouse or partner.

If you separate from your spouse and you own joint property together, you should consider changing your property ownership to ‘tenants in common’ and making a new Will alongside that change.

If you own your property as a tenant in common, you need to clearly state in your Will who should inherit your share in the property.

Making provisions in your Will is the best way to make sure that your preferences are followed out, regardless of the legal ownership you have over your home and other real estate assets.

Planning ahead with Safewill

Our accessible and affordable services can help you plan for what’s next, by setting out your wishes with our online Will-writing platform or simplifying your role as an executor with our affiliate law firm Safewill Legal. Get started with us today or speak to our friendly team if you have any questions.