Many jointly owned properties in England and Wales, are owned as a beneficial Joint Tenancy.
The main legal implication of this is that the joint owners each own 100% of the property. So, if one owner dies the other automatically owns the entire property without any further transactions or dispositions.
This means that, for Inheritance Tax purposes, the property does not form part of the deceased’s estate and does not therefore attract payment of inheritance tax. However, its value will form part of the survivor’s estate and may well attract Inheritance Tax on their death, i.e. on the survivor’s death.
Major disadvantages, however, are that the respective joint owners cannot, through their Will, leave their share of the property to someone else in the event of their death. Neither can their share be put into a Protected Property Trust for the benefit of the survivor.
It doesn’t matter what is in the will, if the property is held as “Joint Tenants”,
the survivor inherits the whole property.
To overcome this problem the beneficial Joint Tenancy needs to be severed and the Land Registry notified. This will change it to a Tenancy in Common.
You will know if your current mode of ownership is a Tenancy in Common as the following wording will be present in the B section of the Title Register:
(Date) RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the Registrar or the court.
If the above wording is not present the mode of joint ownership is a beneficial Joint Tenancy.
Converting a Joint Tenancy involves preparation and service of a Notice of Severance of Joint Tenancy and then the registration of a Restriction at HM Land Registry. The consent of the other joint owners is advisable but not necessary (but they should countersign it as an acknowledgement), so that you can convert even if the other joint owners disagree.
The necessary documents can be prepared and administered by Lifetime Trustees Ltd. This is part of our wills and estate planning service. We complete all the forms for you and ensure your registration is completed. Land Registry do not charge for the re-registration.
If you are not sure how your property is currently held, just ask and we will let you know and advise accordingly. Contact us here or call 0798 883 0691.