Welden & Coluccio Lawyers

Shared Property Ownership: Joint Tenants or Tenants in Common?

Maddalena Romano — Sat, 08 Apr 2017 03:31:07 +0000

The purchase of real estate is nearly always a significant event in a person’s life. During this time, the buyer will be asking some very serious practical questions such a; can I afford a mortgage? What will the repayments be? How is my life about to change?
As lawyers, we find that there is one very important question which often gets overlooked by prospective buyers: How do I own the real property if there are two or more purchasers?
Most people do not even realise that there are different types of land ownership.
What are the different types of land ownership?
If real property is owned by one person, this is called sole ownership, but if two or more persons own the property they would hold the property either as Joint Tenants or Tenants in Common. The above terms are used to refer to two different types of joint ownership of property.
It is important for prospective buyers to understand the differences between the two types of joint ownership as there are important legal differences between them with the buyer selecting the right type of ownership depending on their situation.
Joint Tenants
Joint Tenants assumes that each tenant has an equal interest in the real property and is entitled to a “right of survivorship”. In simple terms, should one owner of the joint tenancy dies, then the survivor is automatically entitled to the deceased‘s portion of the property. An application to the Lands Titles Office of Australia is made to facilitate the registration of this change in ownership.
Joint tenants is most commonly used in situations whereby the two persons are married or in a de-facto relationship. It may not, however be the best choice. For example, if one person had children from a previous relationship and predeceased their new spouse then their share of the property would go directly to the new spouse. Furthermore, as the legal relationship of a step-parent under South Australian law ceases if the natural parent predeceases the step-parent, then the children of the deceased, unless willed, would have no entitlement to the property and would not be able to make a claim against the estate. Put bluntly, it is possible that the children from the previous relationship are effectively disinherited.
Tenants in Common
Tenants in Common differs in that buyers do not have to hold the real property in equal shares but rather shares can be apportioned to reflect each buyers’ contribution. Tenants in Common does not allow for the ‘right of survivorship’. This means that when one owner dies, that person’s share does not automatically vest in the other tenants owning the property. Rather, the deceased’s share is dealt with under his or her estate and the Executor or Administrator must administer the will or letters of administration in order to be able to pass on that interest on to the relevant beneficiary.
Tenants in Common is frequently used where the prospective buyers of the real property are in business or are friends or relations who have pooled their funds to purchase the property. Furthermore, it may also be relevant to consider changing your ownership from Joint Tenants to Tenants in Common in the case of a relationship breakdown to negate the pitfalls describe above with Joint Tenants.
It is prudent to seek advice from a solicitor when purchasing a property in order to ascertain the best way to own the property. A solicitor is best equipped to determine the best types of land ownership for you with an awareness of the implications of this from an estate planning, asset protection, and tax perspective. For advice on joint tenancy or property law in general, please contact Maddalena Romano or the team at Welden & Coluccio Lawyers.

Estate Planning Series: Part 3 “Dealing with Non-Estate Assets”

Maddalena Romano — Wed, 21 Dec 2016 00:24:27 +0000

With many ‘average Australians’ having assets which are ‘non-estate’ assets, it is crucial that these individuals develop strategies (ie an estate plan), to ensure that the control of these assets is passed to your loved ones upon your death.

In part 2 of the Estate Planning series I identified some situations where assets may be non-estate. In this article I will explore some general strategies for dealing with these kinds of assets with an aim to control who has access to them upon your death.

What happens to property owned as joint tenants?

The right of survivorship applies to property held among individuals as joint tenants. This means that upon the death of one of the owners, full ownership of the property will automatically revert to the surviving owner. The property will not form part of the deceased owner’s estate.

In your estate plan, if you do not wish for the right of survivorship to apply, steps can be taken to sever a joint tenancy, so that the property is held as tenants in common. This will enable your interest in the property to flow to your estate.

What happens to your superannuation?

Superannuation is separate to your estate, therefore, it is not automatically distributed in accordance with your Will. Without an estate plan, the trustee of your superannuation fund may decide which dependents to pay your superannuation to.

Welden & Coluccio Lawyers, when discussing your estate plan, can help to control which dependents your superannuation is ultimately paid to.

It should be noted that there are strict compliance issues which impact whether a binding death benefit nomination is valid.

What happens to assets held by a discretionary family trust?

Trust property will not form part of your estate as the assets are owned by the trust itself.

Without an estate plan, assets held by these separate legal entities may not pass to your loved ones as you wish.

Welden & Coluccio Lawyers can devise a plan, whereby you can transfer control of these assets to a specific person. If you are concerned about assets held in a separate legal entity, it is imperative that you have your trust and company documentation reviewed by an estate specialist.

What happens to life insurance?

If you have taken out a life insurance policy to ensure that your loved ones continue to enjoy a certain lifestyle in the event of your passing, it is important to consider how this policy has been established. If a beneficiary has been nominated on the policy, the life insurer must pay the beneficiary directly. This means that the proceeds will not form part of the insured’s estate. Therefore, it is important how you have made the respective nominations.

An effective estate plan means considering and appreciating all aspects of an individual’s life. At Welden & Coluccio Lawyers our speciality is estate planning and we are able to effectively tailor the right estate plan to meet your needs and those you love.

What Happens to my Home when I Die?

Maddalena Romano — Thu, 23 Jun 2016 06:45:26 +0000

The ‘Great Australian Dream’ is well and truly alive with nearly 70 percent of Aussies living in a home they own outright or have mortgaged. With the family home being the largest asset that most of us will ever own, it is important to understand that the way this asset is registered can have implications for what forms part of your estate when you die.

“But it is my house, I paid the mortgage?”

Indeed. If the house is registered in only your name, you can put it in the Will as such. However, if you own the house with another person (usually your spouse but it could be any other person relative or not), there are two ways that you can legally own it.

Jointly – this is the most common way of owning property and you would be a “joint proprietor” with the other person;

Tenants in Common – This doesn’t mean that you are tenants; it means that you each own a certain percentage of the property (usually 50%) and you can deal with your percentage however you want to.

If you own your home as a joint proprietor, then, when you die, the home automatically passes to your other joint proprietor. It makes no difference whether you have a Will or not. However, if you own your home as tenants in common, you can leave your percentage of your house to whomever you want in your Will.

Accordingly if you own your home as Joint Tenants that is as a joint proprietor, but would like to leave your share of the property in your will, you will need to have the title changed – this is usually not very expensive. Get in touch with the Titles Office in your State.