Severance of Tenancy

The majority of people who are married or living together own their house as Joint Tenants. This means that on the death of the first Joint Owner the property will pass to the surviving Joint Owner under the law of survivorship. This is because you both own the entire property jointly, not a share of the property.

If you wish to change the way in which you own your property from Joint tenants to Tenants in Common, a Severance of Tenancy must be completed. The share is usually a equal division, but a variable division can be made if one person has made a greater capital contribution to the property.

You can, as Tenants in Common, dispose of your share of the property in your Will. A Life Interest in the Trust property can be granted to the surviving spouse or partner. This means that they have the right to live in the house for life. Should they need to move house, say to downsize, another property can be bought with the agreement of the Trustees, using all or part of the Trust capital. They also have the right to the income from the Trust for life. The capital remains in Trust for the beneficiaries. The new property would again have to be held as Tenants in Common, to preserve the Trust’s share of that new property.

Should the surviving spouse or partner remarry or cohabit after the death of the other spouse or partner, the half of the property owned by the deceased has passed to a Trust for other beneficiaries (normally the children). This share of the property will be protected for those beneficiaries and cannot go to a new partner or spouse. Advantage may be derived under the present Act relating to Residential Care. The estate of the survivor only includes half the value of the property and the other half is again safeguarded for the beneficiaries. The share of the property is normally held in a Trust to prevent any claims on that share of the property. If it was passed directly to the beneficiaries and a claim was made on the assets of one of those beneficiaries, through bankruptcy or divorce, a sale of the property could be forced. By holding the property in a Trust, the beneficiaries do not own the property, the Trust owns it, and so a sale cannot be forced.