Severance of Joint Tenancy
(to tenants in common)

What is Joint Tenancy?
A joint tenancy is a form of ownership by two or more individuals together. This form of ownership decrees that property will automatically pass to the survivor/s regardless of any instructions in their Will.

What is Tenants in Common?
A tenancy in common is another form of co-ownership the difference is that upon the death of one co-owner, his or her interest does not automatically pass to the surviving owner, but passes according to their Will.

Why would I want to change my Joint Tenancy to Tenants in Common?

  • As a  ‘tenant in common’ you have the choice of who inherits your half of your property, according to your Will, therefore safeguarding your children’s inheritance if your spouse re-marries or co-habits after your death.
    But what if the surviving Partner has to sell the property to settle the entitlement to the beneficiary?
    A simple solution to this is to give the survivor a ‘life interest’ in the property – this will enable them to reside in the house, for as long as they live.

  • The family home may be your main legacy to your children, tenants in common can help protect your property from future unforeseen situations, for example, long term care.
  • You can reduce an Inheritance Tax liability by utilising both the Inheritance Tax nil-rates available to you – this is currently set at £325,000. 
  • For example if your property was worth £650,000. And you had a joint tenancy you could have to pay 40% Inheritance Tax on £325,000. 
  • However, if you held the property as tenants in common, through taking advantage of both the nil-rates available there would be no Inheritance Tax to pay, since when the surviving spouse or partner dies a further nil-rate band would be available.

This would create a saving of £140,000. That would have otherwise gone to HM Revenue & Customs.