What Is A Joint Tenancy?
A joint tenancy is where the co-owners all own the whole of the property. Therefore, if one of them dies, the legal title and their share in the property automatically passes by survivorship to the surviving co-owner(s).
The legal title cannot be severed but the equity in the property can.
What Is A Tenancy In Common?
A tenancy in common is where each co-owner owns a separate equitable share in the property that will pass under the terms of their Will or the laws of intestacy if they die without leaving a valid Will.
When Does It Matter?
Couples who are splitting up are often advised to change the ownership of the property from ‘joint tenants’ to ‘tenants in common’ and update their Will. This is so that their share of the property passes under the terms of their Will and not to the ex-spouse before the divorce has been finalised.
It is usual (but not compulsory) for married couples to purchase their property as joint tenants. Unless they have contributed different equitable shares to the property, in which case they may elect to purchase the property as tenants-in-common.
What Does This Mean When Going Through A Divorce?
As stated above, couples are often advised to sever the joint tenancy of their property so that their shares in the property do not pass automatically to each other by survivorship. Instead, they will pass on to beneficiaries of their choice under a Will.
The severance is most commonly dealt with by both parties signing a document known as a ‘declaration of severance’. It is also possible for one party to sign and serve the notice on the other.
The declaration of severance is then either registered with the Land Registry. If the property is not registered with the Land Registry, then a copy is placed with the title deeds.
Shares in the property will usually be equal, until the financial side of the divorce/ legal separation has been finalised. Severing the joint tenancy does not adversely affect the financial side of a divorce and it can be an extremely useful way to protect shares in a property.
So, Why Is A Will So Important?
If clients do decide to sever the joint ownership of their property, it is vital that they make a Will to state where their share in the property goes. This could be to their children or other beneficiaries of their choice.
If they fail to make a Will, or they die without leaving a valid Will, then their share in the property will form part of their estate and will pass under the laws of intestacy.
If the divorce or legal separation has not been finalised, then the client’s share in the property may well pass under the intestacy provisions to their spouse; which totally negates the benefit of severing the joint ownership of the property.
A Will Does Not Cost The Earth
Many people put off making a Will because they believe it will be costly, time consuming or even because they believe it may ‘tempt fate’, but this is not the case.
A draft Will is usually sent out for approval within 7-14 days from taking instructions and it will be valid as soon as it has been correctly signed and witnessed. A Will can even be prepared the same day, if it's urgent.
As for tempting fate, I have worked within private client law for over 37 years and have never known anyone to die because they made a Will!
Next Steps...
So, if you are going through a divorce or legal separation, please talk to your legal advisor about severing the joint ownership of your property. If you decide that this is right for you, make sure you make a Will to ensure that the benefit is not lost.
If you would like any further information regarding the issues raised in this blog, then please telephone me on 01332 364436 or e-mail me at s.hilliard@timms-law.com.
