Property ownership can be a confusing and complex process and is rarely ever simple. What many people don't realise is the way you own property will impact who and how you can distribute that asset after your death.
An important part of estate planning is understanding how your property is owned and what will happen to the property after death based on the nature of the title, so nobody is surprised.
Ways a Property can be Owned
Sole Ownership: only one name is on the title (the property is owned by only one person).
Tenants in Common: the property title is held by two or more people, each having a share (equal or otherwise) in the property.
Joint Tenants: each owner has an undivided interest in the property. This is the most common form of title for married or long-term couples.
How Ownership Impacts Distribution of the Property After Death
Many people make assumptions about property ownership that turn out to be very different after death. The way your property is owned and subsequently distributed after your death can have a massive impact on your beneficiaries.
Below is an outline of how each type of property ownership is handled after death:
Sole Ownership: Property held in one person's name will form part of their deceased estate and will be distributed according to their will, or by the rules of intestacy if there's no valid will. As part of the estate, the property can be sold to facilitate distribution to other beneficiaries or pay any outstanding debts of the estate. This can leave a surviving spouse vulnerable and potentially require them to leave their home or buy their home from the estate (which may not be financially possible).
Tenants in Common: as each owner has a separate share (equal or unequal) of the property the deceased's share becomes an asset of their personal estate with that share being distributed according to their will (or by intestacy laws if there's no will).
Joint Tenants: the deceased person's share of the property will automatically pass to the surviving joint owner(s) under the right of survivorship, regardless of what is stated in the deceased's will or the joint tenant's relationship to the deceased. This is a common form of ownership for married or de facto couples as it ensures the surviving spouse does not lose their home during estate distribution.
Other considerations
The way a property is owned will impact whether the property needs a grant of probate (additional costs), capital gain tax outcomes, who has legal control of the property after death, whether the survivor can sell or refinance, and ultimately, who benefits from the estate.
Changing Ownership In Your Lifetime
It's possible to work with a conveyancer to change the form of ownership of your property during your life time if the current ownership structure doesn't meet your estate planning goals (eg from join tenants to tenants in common).
It's essential to seek advice from an experienced estate lawyer and/or tax professional to ensure your wishes are met and you understand potential tax implications, such as Capital Gains tax.
Changing a Property Title After Death
Your personal representative (the executor or administrator) will not be able to transfer or sell the property until they have received a Grant of Probate or Letters of Administration.
If the property is registered as joint tenants, a conveyancer will transfer the title into the name of the surviving owner only.
If the property is registered as tenants in common, the deceased's share will be distributed according to their will (or intestacy laws). In that case, a conveyancer will arrange to transfer the title accordingly.
If you are selling the property a conveyancer will transfer the Certificate of Title into the executor or administrator's name before it can be transferred to a buyer.
Why it's Important to Use an Experienced Deceased Estate Conveyancer
Conveyancing can feel like an additional line of hoops to jump through or raft of paperwork to wade through, at the best of times. During estate administration, it's even more important to have a conveyancer you can trust and who understands the unique requirements (and emotions) of handling a deceased estate.
At Your Estate Lawyer, our team includes an experienced deceased estate conveyancer whose entire job is helping make the distribution, sale, and transfer of assets a stress-free and seamless process.
We're here to help you understand how your property is owned and how it will be distributed after your death, and get it right - so you don't set your family up to fight.
The contents of this article do not constitute conveyancing or legal advice and are not intended to be a substitute for conveyancing advice and should not be relied upon as such. You should seek professional advice in relation to your specific circumstances.