When it comes to estate planning, the type of property ownership you choose can have a significant impact on how your assets are handled after your passing. In Australian law, there are two main forms of property co-ownership that can affect your estate’s distribution and may impact the effectiveness of your estate plan.

Understanding Joint Tenancy vs. Tenancy in Common

The two primary types of co-ownership recognised in Australian law are:

1. Joint Tenancy: Typically held between two or more individuals, with each having an equal interest in the property for their lifetime.

2. Tenancy in Common: Can be held by individuals or entities (like companies or trusts), and ownership does not have to be equal.

Choosing the appropriate ownership type is an important aspect of planning your estate. The ownership structure will determine how family assets, business holdings and/or real estate investments will be distributed.

Joint Tenancy

In a joint tenancy, ownership is based on the principle of survivorship. This means when one joint tenant passes away, their share automatically transfers to the surviving co-owner(s), bypassing the deceased’s estate entirely. The family home is commonly held as joint tenants, simplifying the transfer of ownership to a spouse or family member upon death.

Tenancy in Common

In tenancy in common, however, each co-owner holds a specific share of the property. When a tenant in common passes away, their share becomes part of their estate, and the executor distributes it according to the Will or the laws of intestacy if no Will exists. This setup can be beneficial for estate planning flexibility, especially if the co-owner wishes to leave their share to someone other than the other co-owner(s).

Breaking a Joint Tenancy

Joint tenancy can end upon the death of a co-owner or be severed under the following circumstances:

• By one joint tenant’s election: If one co-owner chooses to break the joint tenancy, they can initiate the severance.

• By mutual agreement: All joint tenants may agree to change the ownership structure.

• By court order: The court can order the severance if necessary, typically in cases of family law proceedings or disputes.

Reasons to Sever a Joint Tenancy

There are several common reasons why property owners may choose to sever a joint tenancy, including:

• Maintaining eligibility for a means-tested pension: By not inheriting a co-owner’s share, a surviving co-owner may retain eligibility for certain government benefits.

• Estate planning preferences: Some individuals wish to leave their share of the property to a beneficiary other than the surviving co-owner.

• Interim arrangements for separating partners: Severance of joint tenancy may be an interim solution for couples going through a separation before formal financial settlements are finalised.

Estate Planning Guidance for Co-Ownership in Western Australia

At Granich Partners, we have extensive experience helping clients in Western Australia navigate complex co-ownership arrangements in estate planning. Whether you're considering joint tenancy for simplicity or tenancy in common for estate flexibility, our team will provide tailored advice to ensure your assets are protected and distributed according to your wishes.

Contact Granich Partners Today

With a deep understanding of Western Australian property and estate law, Granich Partners is here to help you make informed decisions about property ownership in your estate plan. Contact us to discuss your estate planning needs and secure peace of mind for you and your loved ones.