What Happens to Your Property When You Die

Despite the ready availability of wills and will writing services, most people in the UK, about 70% in fact, die “intestate” (without a will). People may make their wishes know to family and friends and hold on to a romantic notion that those wishes will be respected, so that there is really no need to go to the expense of having a will prepared. Unfortunately, this is all too often not the case. Many people put off writing a will because they find it morbid, a reminder of their mortality, however you should bite the bullet and get it sorted, especially if you own your home.

What happens to your property when you die will be different depending on whether you are a sole owner, a joint tenant or a tenant in common. It may also depend on whether you are living with a spouse, civil partner or co-habitee at the time of your death.

Owning a Property as Joint Tenants on Death

This is the most straightforward scenario. When it comes to owning a property there are two “titles” or “estates”. There is the legal title and the equitable title. The legal owners are the people named on the title deeds as the proprietors and are the people with the power to sell, gift or mortgage the property. The equitable owners are the people entitled to the equity in the property. They are the beneficiaries.

Where there are joint owners, a trust of land is created, so the legal owners hold the property on trust for the equitable owners. In the case of a joint tenancy the legal owners and the beneficiaries are the same people, so Mr and Mrs Smith hold the legal title on trust for Mr and Mrs Smith. If either one dies, the whole of the equitable (as well as the legal) title passes to the survivor.

This means that irrespective of any instructions in a will the survivor will always inherit. If you hold a property as joint tenants with another you should consider whether this is actually what you want to happen. It may have been the plan originally but is it still so? It is quite simple to sever a joint tenancy and prevent the survivorship rule from operating however this step should not be taken lightly. Once severed a joint tenancy cannot be resurrected.

Owning a Property as Tenants in Common on Death

The alternative type of joint ownership is tenancy in common. It is important to note that even as tenants in common the legal title will still be held as joint tenants, there is no such thing as a legal tenancy in common. This is important because on the death of one tenant in common the survivor still has control over the legal title, the deceased’s executors do not inherit this power.

If a property is owned by two people as tenants in common and one dies, his equitable share passes according to his will or, if he did not leave a will, in accordance with the rules of intestacy. This can lead to difficulties. The remaining tenant in common will hold the property on trust for himself and for the beneficiaries of the deceased. This means that the beneficiaries have certain powers and can dependent on the circumstances force a sale, leaving the legal owner homeless. On the other hand the legal owner may be able to remain indefinitely, thus preventing the beneficiaries from realising their inheritance. Cohabitees enjoy much less protection than spouses or civil partners though they do have some protection.

Either way, if your wishes are not clear and legally binding in the form of a will and if a dispute arises then much of your estate can be swallowed up in legal fees so that by the time a court makes a ruling there might not be much left to dispute! You can specify in a will not just who inherits your share in a property but to an extent who can live in it and for how long.

Owning a Property Outright on Death

If you own a property in your sole name then anyone living with you at the time of death will not have an automatic right to stay on afterwards and in fact unless he or she is the sole beneficiary under your will or intestacy it is likely they will have to leave in order for the house to be sold.

It is possible to leave instructions in a will that a particular person is allowed to remain in the property for life or for another defined period but that another person actually inherits. They will take the property once the right to occupy comes to an end. If you leave with someone to whom you are not married and do not leave a will then under intestacy rules they will not be entitled to anything whatsoever, even you have been with that person for most of your life.

Account for those who are disinherited

Be careful when writing a will to account for anyone who might expect to inherit but who you do not want to receive anything or you want to receive less than they might expect. Unless you make it clear why a particular person is not inheriting then they may be able to challenge the will in court and succeed, even against your wishes.

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