WillsCo-ownership and Severance

Where more than one person owns property, there are two ways in which the owners may own the equity of the property.

Joint Tenants

A joint tenancy is the most common and standard method for property to be held. Under a joint tenancy, each owner does not have their own ‘share’ in the property. Instead, all owners equally own the whole property together. If any of the owners die, the deceased’s interest in the property passes automatically to the surviving owners without the need for a Grant of Probate. This is known as the right of survivorship.

Due to this, a person’s interest in a property held as joint tenants is not giftable under a Will, as their interest would not form part of their estate on their death. However, once one owner remains they will own the property solely and can deal with it as they wish.

Please note that even though a property held as joint tenants would not form part of the deceased’s estate, it is still part of their estate for inheritance tax purposes.

Tenants in Common

If a property is held as tenants in common, each owner has their own distinguishable share in the property that they can deal with as they wish. It does not pass by survivorship to the other owners on death and it will form part of the deceased’s estate on death to be passed by their Will or by Intestacy.

Severance

A property held as joint tenants can be changed to tenants in common by a severance of tenancy. Please note, however, changing a property from tenants in common to joint tenants is more complex as a conveyancer would need to be involved in that process.

Reasons to Sever a Joint Tenancy

If an owner on their death wants their share to pass to someone other than the surviving owners equally, they would need to sever to tenants in common in order for that gift to be effective. Similarly, if a person wishes for their interest in a jointly property to pass to a trust on their death (for example a PPT for the surviving spouse), the property needs to be severed.

If an owner is happy for their interest in a property held as joint tenants to pass to the surviving owners equally on their death, there would be no need to sever the joint tenancy of the property. If anything, severing would be a disadvantage to them as it would mean that the property would need to pass through probate when it could otherwise pass automatically to the surviving owners outside of probate.

A severance can only change interests from joint tenants to tenants in common, it cannot be used to:

• Transfer an interest to another person (for example, a person owning a property solely wishing to transfer half of the property to their spouse).
• Amend the shares in which the property is owned.

As these are transfers of the equity of the property, a conveyancer would be required.