There is often confusion as to how jointly owned assets should be treated upon the death of one party and often people wrongly assume that:
Either a person is able to dispose of their share of the jointly owned asset however they like in their Wills or following their death; or
That the surviving owner will automatically inherit their share of the joint asset following their death.
The position following death depends on the type of asset owned.
Property and land:
Some people refer to the term “joint tenants in common”, but really there are two ways of owning property, the first way is as “tenants in common” and the second way is as “joint beneficial tenants.”
Owning the property as tenants in common means that each person owns a separate and distinct one half share of the property, which they can leave to whomever they wish in their Wills.
If the owners instead hold the property as joint beneficial tenants, this means they are not able to leave their individual shares of the house in a Will and that upon the first owner’s death, their share will automatically pass to the surviving joint owner.
It is important to think about how you want to own property and how you plan to dispose of the property following your death. If you and your partner hold your property as joint tenants, then you are often able to sever the joint tenancy. This will allow you the freedom to leave your share of the property in your Will.
Bank accounts and other assets:
Assets other than land and property, such as bank accounts or investments, which are owned by two or more people will generally be held as joint beneficial tenants. This will mean that upon the death of one of the joint owners, the asset will automatically pass to the surviving joint owner(s).
It is becoming increasingly common for children to open joint bank accounts with one of their parents, for example if their parent is elderly and has difficulties in dealing with their own affairs. This raises problems if the parent later dies, as it may be difficult to tell whether the parent intended for the account to pass automatically to their child (particularly if they had other children or relatives they may have intended to benefit).
It is important that at the time of opening the joint account, there is a clear indication of who the funds in the account belong to, the intention as to their use and the ultimate beneficiaries on death.
In a lot of cases it may be better for the parent to enter into a Lasting Power of Attorney, providing that they have sufficient mental capacity to do so. This would allow them to appoint an Attorney of their choice to act on their behalf in dealing with their financial affairs. In this case there would be no need to open a joint bank account, as the Lasting Power of Attorney will enable the Attorney to manage the funds in the parent’s bank account for the parent’s benefit. This will ensure that it remains clear that the funds in the account belong solely to the parent and should be used for their benefit.
If you would like to clarify whether you own assets as “tenants in common” or as “joint beneficial tenants” and would like more information about the passing of jointly owned assets on death or Lasting Powers of Attorney then please contact me, Stephanie Parish on 0113 336 3355 or via email firstname.lastname@example.org.
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