When you have an asset, it is not always necessary that you are the sole owner of it. Many times, we co-own property with another person, such as our spouse, another relative or a business partner.
When you decide to make a will, importance should be given to joint or sharable assets too. Otherwise, upon the death of an owner of the sharable assets, problems may arise regarding how the asset will be distributed, who will be responsible to take care of the sharable asset and how the profit will be distributed to name a few.
However, sometimes an owner does not get the time to make a will and things get out of control upon his death.
It needs expert advice like from wills dispute lawyers when it comes to the distribution of sharable assets amongst owners after the death of one owner. The distribution of sharable assets or whether the property needs to go through probate, mostly depend upon the type of joint ownership.
Probate is legal procedure of settling the estate of a person who has died. This legal procedure is time consuming as well as expensive and tiring for the owners of the joint property. In fact, this is why many people are in favour of making a will to keep their property out of probate.
There are some forms of joint ownership that can help you avoid probate, but there are several forms of joint ownership that can have impact on your ownership rights, taxes, and control of the property. Hence, before you decide to co-own property, get advice from the best wills lawyers.
Types of Joint Ownership
In Australia, there are three common forms of joint ownership – tenancy in common, joint tenancy with right of survivorship and tenancy by the entirety.
Tenancy in Common
A tenancy in common is a simple form of joint ownership. This type of joint ownership requires probate when it comes to distribution of sharable assets amongst remaining owners after the death of one.
Under tenancy in common, two or more people can own property together, in equal or unequal shares. Here, each owner has the right to sell his or her share independently and may also leave his or her share to a new owner at death.
In order to avoid probate, you may add the property to a living trust or simply pass it to a new owner via a transfer-on-death deed.
Joint tenancy, also known as joint tenancy with right of survivorship is a form of ownership where one of the owners of the property can pass it to the other owner without probate. However, this type of joint ownership is restrictive and can cause tax complications.
Under joint tenancy, two or more people own a property together in equal shares. A good example of joint tenancy is your matrimonial home which often belongs to both the partners and they are known as joint tenants. A husband and wife may own 50 per cent of the matrimonial home each.
Joint tenants cannot sell or pass on their interest in the property without breaking the joint tenancy. They can choose to sell together. But, in case one joint tenant dies, that person’s interest passes to the surviving owner or owners.
The last surviving joint tenant becomes the owner of the whole property and can sell, mortgage, or pass on the property without restriction. However, if the last owner dies without a will or by putting the property in a living trust or by using a transfer-on-death deed, the property will go through probate.
If you want to create a joint tenancy, see a wills lawyer for help. They will help to avoid probate, by helping you add the property to a living trust or passing it to a new owner using a transfer-on-death deed.
Tenancy by the Entirety
In this type of joint ownership, no probate is required.
A tenancy by the entirety is a form of joint ownership designed for spouses and domestic partners. Like joint tenancy, property owned in tenancy by the entirety passes to the surviving spouse without probate. However, here the partners don’t have separate shares, they own together as one unit.
Marriage or domestic partnership is required to own property under this form of ownership. This means divorce or dissolution of domestic partnerships automatically breaks the ownership into tenancy in common. During the marriage, no partner can change the ownership unilaterally, but can change the ownership type upon joint consent.
As each state in Australia has its own legislation regarding succession and wills, it is best to consult the best will dispute lawyers in your state and seek guidance from the expert regarding joint ownership of property and how to prevent probate.
At Wills Lawyers Perth, you can find a team of expert wills lawyers who can give you the best advice regarding how to make a will as well as the pros and cons of joint ownership of assets.
Contact Wills Lawyers Perth today!