Dealing with jointly owned property

When making provision in your Will for your family, there are many important matters to consider and one in particular, is how to deal with your share of a jointly owned property. This applies to any property held jointly, not just husband and wife or civil partners. If one or both joint owners have children from a previous marriage or relationship, or want to preserve a share of a property for their children in the event of one or both joint owners having to go into residential care, it may be worth considering making provision in your will to leave your share of a jointly owned property to your children, rather than to your spouse. This is possible.

There can be some confusion over jointly owned property and this article will endeavour to explain. There are two types of joint ownership:

Joint tenancy
Where a property is owned under a joint tenancy, the property automatically passes to the surviving joint owner. This property cannot pass under a will or under the rules of intestacy, as title to the property passes to the survivor on production of a death certificate.

Tenancy in common
This is when one joint owner dies, his or her share of the property in accordance with his or her will or the rules of intestacy.

In the case of a property it would be appropriate for a married couple to hold that property as joint tenants. However, if the couple, whether married or not, have children from a previous marriage or relationship, they may wish to protect their share of a jointly owned property for their children. If a property was original purchased or set up as a joint tenancy, the joint tenancy can be severed.

When you come to update or make a new will it is important to discuss openly, your circumstances and your exact wishes and to decide whether there should be a severance of that joint tenancy. If you are unsure as to whether a property is held under a joint tenancy or tenancy in common and you wish to leave your share of that property to someone other than the joint owner, a notice of severance should be served as a precaution. When severing the joint tenancy of a property, the notice of severance is prepared by either one of the joint owners and served on the other joint owner.

There are rules about how the notice is served for it to be effective. The notice can be served personally but this does not have to be the case. Any notice shall be sufficiently served if it is:
• left at the last known place of abode of the person to be served, or
• sent by post in a registered letter or recorded delivery addressed to the person to be served by name, in his/her place of abode, which is not returned as undelivered by the Post Office.

Evidence is required that the notice was 'left' at the premises. It is irrelevant that the addressee does not actually receive it.

The act of severing the joint tenancy must be carried out correctly, as this is very important to ensure that the terms of a will are effective.

The general rule regarding bank accounts held in the joint names of husband and wife or civil partners, is that the parties are treated as entitled to the income and the balance of the account in equal shares, irrespective of their actual interests. There are exceptions to this rule and one is that the parties can sign a declaration of unequal shares or a declaration that one or neither party is beneficially entitled to the income, e.g: they hold the account as trustees.

In a recent case, a married couple held a joint bank account and the husband failed to declare any part of the interest on his tax return. The Inland Revenue argued that the husband was liable to take on 50% of the income. It was held that the parties could have made a declaration of unequal beneficial interests but as they failed to do so, the general rule applied and the parties were treated as entitled to the income in equal shares.

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