There are three main ways of owning land and property, and depending on how you own your assets can affect how you can deal with them and what will occur upon your death.
If you own an asset in your sole name, this means there are no other registered proprietors of the land. It is your and yours alone. You might have a mortgage on it, and there might be other restrictions on it that affect how you can deal with the asset, but it is treated as yours.
You can distribute this asset through your will upon your death. If there is a still a mortgage on it when you die then this will only be paid out by your estate if your will specifically directs. Otherwise, it is usual for the property to be sold in order to pay out the debt.
If you have specifically given your home to a particular person and they wish to keep the home, then unless your will specifies otherwise, they will have to deal with the mortgage personally.
This is a common form of ownership for married couples. All joint owners own the whole of the property; they do not own portions or specific shares. For example, two people who own a home as joint tenants both own 100 per cent of the property and not, for example, 50 per cent each.
Jointly owned assets automatically pass to the surviving joint owner or owners upon a joint owner’s death. This occurs regardless of what the joint owner’s will says. For example, if a husband and wife owned their home jointly and the husband passed away, then the house would automatically become the wife’s sole asset. The husband cannot give his interest in the home to anyone else through his will.
The surviving joint owner or owners can apply to the Lands Titles Office if they wish to have the deceased person’s name removed from the Certificate of Title. Whether or not the deceased person’s name is removed, however, does not affect the ownership of the property.
Tenants in Common
Tenants in common is another form of ownership with two or more persons. Unlike joint ownership, each owner has a distinct portion or share of the property. They may have equal shares or they may own shares unequally.
When one owner dies, their share or interest in the property will be distributed in accordance with their will, or if no will then by legislation. There is no right of survivorship with property owned as tenants in common. This means the deceased person’s interest in the asset does not automatically pass to the surviving owner or owners.
Tenants in common is often used for blended families, that is, for couples who have children from previous relationships. They may wish to give their share of the property to their own children, rather than it automatically passing to their partner and being distributed in accordance with the partner’s wishes. However, wills should be carefully prepared when this is the case, as often people do not want their partner to be kicked out of their home immediately upon their death.
Joint Tenants & Tenants in Common
Property can also be owned with a combination of both these forms of ownership. For example, a husband and wife might own a half share of a property as joint tenants. The other half share might be owned by their adult son. The husband and wife’s share would be owned as tenants in common with the son. If the son died, then his half share would be distributed in accordance with his will, or if no will then legislation. It would not automatically pass to his parents.
If the husband or wife died, then the surviving wife or husband would own the whole half share as tenants in common with the son.
Property ownership can be determined and discussed with your lawyer. You can also change the form of ownership to suit your needs.
If you are concerned about particular people contesting your will or making a claim on your estate, then your lawyer will discuss with you ways of minimising that risk by potentially changing the way you own your assets.
We will discuss with you all the relevant considerations from an estate planning point of view, and can assist you to receive advice from third parties in relation to financial implications, tax, stamp duty and conveyancing fees.
Call us now on 8213 1000 for more information.