Understanding Property Ownership When Writing Your Will
Writing a Will involves more than simply deciding who will inherit your assets. It requires thoughtful planning and consideration, particularly when it comes to how your decisions may affect your Estate and your loved ones in the future.
One of the most common concerns clients raise when preparing their Will is how to protect their assets, especially their property, which is often their most valuable asset. To ensure your wishes are effectively carried out, it’s important to discuss with your legal representative how you own your property, whether ownership is accurately recorded with the HM Land Registry, and to explore the options available to you regarding ownership.
How a property is owned, determines how the property is dealt with after your passing. In this article, we will focus on two key forms of joint ownership: Joint Tenants and Tenants in Common.
Understanding the difference between these ownership structures is crucial in estate planning and can play a significant role in protecting your property for future generations.
Joint Tenants
In most cases, couples choose to purchase a property together as Joint Tenants, meaning both parties are equal co-owners. Under this arrangement, upon the death of one co-owner, their interest in the property automatically passes to the surviving co-owner by operation of the Rule of Survivorship and not via their Will.
While this type of ownership may be appropriate for many, it can present challenges when drafting your Wills, particularly if a property owner would like to leave their interest in the property to someone other than the co-owner.
Tenants in Common
Owning a property as Tenants in Common offers a more flexible approach to property ownership, particularly when considering your estate planning and the drafting of your Wills.
Under this arrangement, each party holds a distinct share in the property — commonly in equal proportions, though this can be varied to reflect individual contributions.
The Rule of Survivorship does not apply to this form of ownership. This means that, unlike Joint Tenancy, upon the death of an owner their share of the property does not automatically pass to the co-owner. Instead, it forms part of the deceased owner’s estate and can be gifted to a beneficiary of their choosing via their Will.
This form of ownership can be particularly beneficial where there are children from previous relationships or there have been differing financial contributions to the purchase of the property.
Can I change the way my property is owned?
Yes, it is possible to change the form of property ownership by making an application to HM Land Registry. For example, you can change from owning as Joint Tenants to Tenants in Common, or vice versa, depending on your circumstances and estate planning goals.
How does it work?
The change in property ownership from Joint Tenants to Tenants in Common is effected through the preparation of a Notice of Severance. This legal document is typically prepared by your legal representative and, in most cases, signed by both parties. However, joint signatures are not always required. For example, if one party has lost mental capacity, the other party may sign and serve the Notice unilaterally.
Once the Notice has been signed and/or served, the Notice of Severance becomes effective. Your legal representative will submit the necessary application to HM Land Registry, which will update the property title to reflect the ownership as Tenants in Common. This registration process may take up to a few weeks to complete.
Are there any advantages to owning as Tenants in Common?
As with any legal decision, it is important to bear in mind your own individual circumstances before deciding how to own your property. Ultimately, many people choose to hold property as Tenants in Common in order to preserve their share of the asset for children/grandchildren.
If you own a property as Joint Tenants, upon the death of one owner, the whole value of the property automatically passes to the surviving co-owner. This means that, should the surviving co-owner require residential care, the Local Authority could assess the full value of the property when calculating financial contributions towards care fees.
By contrast, owning as Tenants in Common allows each owner to retain a separate share in the property. In this case, should an owner need residential care, the Local Authority can only consider the value of their respective share in the property when calculating financial contributions. This potentially protects half of the property.
This form of ownership can be particularly advantageous during a divorce or separation, as it ensures that you maintain control over who inherits your share of the property under your Will.
Granting a Right of Occupation
If you decide that owning your property as Tenants in Common is the right option for you, it is natural to want to ensure your spouse/partner has the security to remain living in the property after your death. This is where we can tailor your Will to reflect your specific wishes and circumstances.
Including a right of occupation in your Will requires careful thought and planning. Your legal representative will take the time to explain the options available, advise you on the legal effect of such provisions and ensure that you are fully informed before making any decisions.
How we can help
At JNP Legal we are committed to understanding your individual needs and providing tailored advice throughout the Will writing process. When you book an appointment with us, our experienced team will guide you through every step, including advice on how your property is owned and how this may affect your estate planning.
We will explain all available options clearly, ensuring you are fully informed before signing your Will. If a change in property ownership would be beneficial, we can structure your Wills to provide both flexibility and security, allowing you or your spouse/partner to remain living in the property with peace of mind.
You can trust JNP Legal to advise you on all aspects of property ownership and to deliver a professional, client-focused service. If you believe a change in ownership could benefit you or your loved ones, please don’t hesitate to contact us and arrange an appointment with a member of our dedicated team.