For most of us who own our home as a couple, whether we are married, in a civil relationship or simply cohabiting, we own it as “Joint Tenants”. This means that neither partner owns any particular share of the property – the entire property is jointly owned. The advantage of Joint Tenancy, for many couples, is that, on the death of one, the property will pass automatically to the other under the “Law of Survivorship” regardless of what may be said in a Will or under the Rules of Intestacy, where there is no Will.
The less common form of home ownership is as “Tenants In Common”. Here, each person owns a specific share of the property – normally equal shares, but any percentage split is possible.
What is a severance of tenancy?
Severing a Joint Tenancy is the process by which a Joint Tenancy is converted into a Tenancy In Common, enabling the owners to own separate and distinct shares in the property. The effect is that, on the death of one co-owner, his or her share will no longer pass automatically to the other but will pass under his or her Will or under the Rules of Intestacy where there is no Will.
Why would I want to sever my tenancy?
For many of us who own our homes as Joint Tenants there may be little immediate need to think about severing the tenancy – although the time may come when such a step has its advantages. Those advantages may appeal to some people but not to others, so there will generally be a specific reason why we would want to take this step. Examples could include:
- Severance allows each party to dispose of their share in their Wills as they see fit – there may be a good reason why they would not want their share to pass automatically to the other, for example, one or both parties may wish to ensure that their children from a previous relationship benefit from their share left in a Will – provision can, of course, be made for the surviving partner to continue living in the property under a life interest trust
- Severance may be used as part of a couple’s inheritance tax planning strategy – for example, a Tenancy In Common allows couples who are not married or in a civil partnership to use a discretionary trust and thereby reduce the amount of Inheritance Tax which might otherwise be payable; further there can be a significant saving on inheritance tax where the survivor under a Tenancy In Common passes away owning only 50% of the home rather than 100%
- Severance may assist with reducing exposure to the cost of care fees where one co-owner has to go into residential care – where a Joint Tenant dies and his or her share passes automatically to the other, this exposes the survivor to losing their home through care costs. As a result of severance, normally, at least half the property can be protected from being taken to fund care fees. If you are interested in severance for this reason, then we would also recommend that you consider a Protective Will Property Trust.
If you are a home owner under a Joint Tenancy, whether you are married, in a civil relationship or simply cohabiting, and your relationship has broken down, we strongly recommend that you take immediate steps to sever your tenancy. This is because, if something were to happen to you, then your share would automatically pass to your estranged spouse or partner and this is something that you are unlikely to want. We, therefore, recommend to all our Family clients the importance of severing their Joint Tenancy and making a Will to express their instructions as to what should happen to their share of the property after their death.
How Can We Help?
Our experienced Probate Team can help you to protect your property for the benefit of those you care about.
If you need advice with regards to Severance of a Joint Tenancy but you aren’t sure what to do, let us give you the answers. Contact us today for an informal, no-obligation, chat or to arrange a Free First Consultation.