tenants in common or joint proprietors - how the manner of property holding effects your will

Many people own property, but don’t realise that how the property is owned can have a major impact on the other owner if one owner passes away. You might be asking yourself what on earth are we talking about. Let’s drill down.

The two most common ownership structures are Joint Proprietors and Tenants in Common. While they may sound similar, they work very differently when it comes to estate planning and are dealt with differently if one owner passes away. This could impact how your property is dealt with, regardless of your intentions or what you have directed in your Will.

 Joint Proprietors

When property is owned as joint proprietors, each owner holds an equal interest in the whole property. The key element of this type of ownership is the right of survivorship.
This means that if one owner passes away, their share of the property automatically transfers to the surviving owner — regardless of what their Will says. The property does not form part of the deceased’s estate.

 This structure is commonly used by married or long-term couples, but it can cause issues if circumstances change or if the intention was for the deceased’s share to benefit children or other family members.

 Tenants in Common

With tenants in common, each owner holds a defined or distinct share of the property (for example, 50/50 or 70/30).

If one owner passes away, their share does not automatically pass to the other owner. Instead, it becomes part of their estate and is distributed according to their Will (or intestacy laws if there is no Will).

This structure is often more suitable for blended families, business partners, or where owners want their share of the property to go to specific beneficiaries.

 Why this matters

Many people assume their Will controls what happens to their property — but that’s not always the case. If your ownership structure doesn’t support how you have left your share of the property in your Will, your wishes may not be carried out.

 Case Study

Client owned a property with his wife. The wife intended for the property to automatically transfer to her husband upon her death. She, or her lawyer, assumed the property was held as Joint Proprietors. Therefore, the wife made no provision for her husband in relation to the property in her Will.

The client came to us to make the application to have the wife’s share of the property transferred to him as surviving proprietor. When we went to proceed with the application, it immediately came to our attention the property was held as tenants in common. This meant the right of survivorship did not apply and the application for the property to be transferred to him as sole proprietor could not be done.

It also meant that the wife’s share of the property had to be dealt with in accordance with her Will. However, no provision was made for the client in the wife’s Will. The wife’s share of the property then formed part of the wife’s residual estate, which was to be distributed to her two children, being the client’s step-children.

The relationship between the step-children and our client was fractured, causing dispute between the parties. What could have turned into a drawn-out litigation, luckily ended in a mediation between the parties who agreed to allow our client to reside in the property until he passed away, in which case the wife’s share of the property could then be dealt with in accordance with her Will and his share in accordance with his Will. This meant that our client then had to update to his Will to ensure his share of the property would be dealt with as he wished.

Moral of the story - A quick check can make a big difference and save parties a lot of money in legal fees

If you’re unsure how your property is held, or whether your current ownership structure still reflects your intentions, reviewing your Estate Plan and ownership structure is invaluable to protecting your assets and your loved ones.

If you would like advice about property ownership, Wills, or estate planning, please contact our office. We’re happy to help ensure your arrangements reflect your wishes and protect your assets and loved ones.