How do you own your property?
One of the important questions I regularly ask clients when they are purchasing their property is how they want to own their property joint tenants or tenants in common. Then that glazed look comes over their faces and I know instantly they are unfamiliar with those phrases. Usually we have a quick tutorial in Property 101 and ownership types and what it means on death and whether they have children to previous relationships.
What’s all the fuss about then? Well it really does matter how you own your biggest asset – your home. If you hold the property as joint tenants, you cannot will your share and the survivor of the owners gets the property outright. For those with children together of that relationship they are likely to want joint tenants. On death it’s a simple transmission of the property title to the surviving party – easy!
Not so easy when the partners or spouses have children from previous relationships. They have different obligations to their own children that the other partner or spouse do not. They are likely to want to ensure their share of the property goes to their children – fair enough. In that situation, we recommend they hold the property as tenants in common. Here’s the catch – they have to update their wills to allow the surviving partner or spouse to live in the property either for a period or time or for their lifetime. Otherwise, the Executors of the deceased partner or spouse can take steps to sell the property to meet the obligations to the beneficiaries of the deceased party. It can really complicate matters and create more anxiety for the surviving party.
Tenants in common can also be a good ownership option when you are getting older and have no family trust. If one dies and the surviving party needed or might need residential care then, any asset assessment would only be on the surviving party’s share, not the estate.
Talk to the team at Law4You about the options when you are next buying your property and take the opportunity to update your wills.