Survivorship in the Context of a Person’s Estate

The rules of survivorship

The rule of survivorship applies where land or property is owned by more than one person and is said to be owned jointly as joint tenants, both legally and beneficially. Whilst in law all joint owners will own their property as joint tenants, with each owning all and none of the property, when it comes to the equity in the property, joint owners can decide whether to own the property as tenants in common or joint tenants. How you hold property with another person will have significant consequences on how your estate is administered after you pass.

Joint tenants

If joint owners of a property choose to own it as joint tenants, both legally and beneficially, then this means simply that they each own all of the property and because of this, when one joint tenant dies the whole property will pass automatically to the surviving owner, regardless of what the will of the deceased owner says.

This is known as the right of survivorship and the same concept is also applicable for bank accounts held in joint names. If one named holder were to pass away the whole account and its value would pass and ultimately belong to the remaining named holder, subject to evidence of any contrary intention.

The right of survivorship is an important one to consider when thinking about your will, estate and what you want to leave to your loved ones after you die. This is particularly important for joint tenants who may have, for example, children or families from previous relationships.

This is because if one owner were to die, the whole property would pass to the surviving joint tenant and this could mean in turn that, when they die, the beneficiaries named in their will would not inherit the property, potentially leaving nothing, or significantly less for them.

Tenants in common

One way to combat this, is by choosing to hold the property as tenants in common. What this means is that each owner of the property owns a pre-determined share of the property. This is a relatively simple legal procedure and will often involve drafting what is known as a declaration of trust. A declaration of trust sets out the proportions of the property each party owns, for example, either by way of percentages, variable shares or fixed sums.

In the event that one owner of the property dies, and if they hold the property as tenants in common, the deceased’s share instead then passes as part of their estate, and in accordance with the terms of their Will.

Their share is then held for their chosen beneficiaries, offering greater control to an owner.

One disadvantage of this may be that, by doing this, it does mean that probate will have to be obtained in respect of the deceased’s estate, in order to sell their share of the house or transfer it to the beneficiaries, which of course may complicate the process and could result in additional costs that might not be required if the property is held as joint tenants and the property simply passes to the surviving owner.

Understand the implications of each approach

Regardless of whether the property is owned as joint tenants and passes via survivorship, or as tenants in common and passes under the terms of the deceased’s will, the value of the deceased’s share in the property will need to be declared for inheritance tax purposes.

In conclusion, there are many reasons why co-owners may decide to hold their property as joint tenants or tenants in common when purchasing a property, for some, the ease of the property passing automatically to the surviving owner is the most important factor, and for that reason many people own their property as joint tenants.

However it is important to consider the implications of this and ensure that it would not result in someone inheriting a share of your property if that is not your intention, or even to consider how best to protect your assets, for example, against potential care costs in the future, hence it is always useful to consult with specialist solicitors to advise you on estate planning and the joint ownership of assets.

Frequently Asked Questions

What is survivorship in the context of estate planning?

Survivorship refers to the rule that certain jointly owned assets such as property or bank accounts automatically pass to the surviving owner when one person dies, regardless of what their Will states.

How does joint tenancy affect what happens to property when someone dies?

If property is owned as joint tenants, the entire asset automatically transfers to the surviving owner under the right of survivorship, bypassing the deceased’s Will.

What is the difference between joint tenants and tenants in common?

Joint tenants own the whole property together, and it passes automatically to the survivor. Tenants in common each own a defined share that can be left to beneficiaries through a Will.

Can survivorship override a Will?

Yes. If property is held as joint tenants, the right of survivorship takes precedence over the instructions in a Will.

Why might someone choose to own property as tenants in common?

This structure allows each owner to leave their share to chosen beneficiaries, useful for blended families or those with children from previous relationships.

Examples

Example A

The blended family

Sarah and Tom live together and own their home as joint tenants. Sarah has two children from a previous relationship and wants them to inherit her share of the property. When Sarah dies unexpectedly, the entire property automatically passes to Tom under the right of survivorship. Even though Sarah’s Will leaves “my share of the house to my children,” it has no effect – Tom now owns 100%. When Tom later dies, the property goes to the beneficiaries named in his Will, not Sarah’s children.

Example B

Avoiding probate delays

James and Louise own their home as joint tenants when James dies suddenly. Because the property is held jointly, it automatically passes to Louise through survivorship. There is no need for probate in relation to the house, meaning Louise can deal with the property quickly and without additional legal steps.