Handling Joint Properties in Australian Wills

Owning property with other people can make things more affordable and accessible, but it also comes with legal rules about what happens to your share if one of you passes away or decides to sell. In Australia, there are two main ways property can be jointly owned: joint tenancy and tenancy in common. Each type has different implications for inheritance and ownership rights. Here’s what you need to know about how property ownership with others is dealt with under Australian law.

1. Types of Co-Ownership in Australia

In Australia, co-owned property is usually held under one of two legal arrangements:

• Joint Tenancy: In this type of ownership, each co-owner has an equal share of the property. Joint tenancy is often chosen by married couples or partners. One of the unique features of joint tenancy is the “right of survivorship” which means that if one owner passes away, their share automatically goes to the surviving co-owner(s), rather than being included in the deceased’s estate.
• Tenancy in Common: This arrangement allows co-owners to hold different shares in the property. For example, one person could own 60%, while another owns 40%. Unlike joint tenancy, there is no right of survivorship in tenancy in common. If one owner dies, their share does not automatically pass to the other co-owner(s); instead, it becomes part of their estate and is distributed according to their Will or intestacy laws if there is no Will.

2. Joint Tenancy: Equal Ownership with Survivorship Rights

Under joint tenancy:

• Right of Survivorship: If one co-owner dies, their share automatically transfers to the surviving co-owner(s). This happens without the need for probate or inclusion in the deceased’s Will. This can simplify inheritance but also means the deceased cannot pass their share to anyone else.
• Equal Shares: Each co-owner has an equal interest in the property, regardless of how much they contributed financially. Joint tenants cannot sell or transfer their individual share without ending the joint tenancy arrangement.
• Ending a Joint Tenancy: A joint tenancy can be “severed” (ended) if one owner decides to transfer their share or changes it to a tenancy in common. This can be done through a legal process if one owner wants their share to go to someone other than the co-owners upon their death.

Example: Bilal and Sara own a property as joint tenants. If Bilal passes away, Sara automatically becomes the sole owner of the property, regardless of Bilal’s Will.

3. Tenancy in Common: Flexible Shares and No Automatic Transfer

With tenancy in common:

• Individual Ownership Shares: Each co-owner can own a different share of the property, based on what they contributed or agreed upon. For example, if three people own a property, they could each have 33%, or two could have 40% while the third has 20%.
• No Right of Survivorship: Unlike joint tenancy, each person’s share in a tenancy in common does not automatically transfer to the other owners if they die. Instead, their share becomes part of their estate and is distributed according to their Will, or under intestacy laws if they have no Will.
• Selling or Transferring Shares: Co-owners can sell or transfer their share of the property without needing permission from the other owners, although they must still comply with any agreements or legal requirements. This flexibility makes tenancy in common a popular choice for business partners or friends investing in property together.

Example: Amina and Batul own a property as tenants in common, with Amina holding 70% and Batul holding 30%. If Batul passes away, her 30% share will go to her beneficiaries as stated in her Will, or according to intestacy rules if she doesn’t have one.

4. Legal Implications for Estate Planning

The type of ownership you choose can have important implications for estate planning:

• Joint Tenancy and Wills: In joint tenancy, the right of survivorship overrides any directions in a Will. So, if you want your share of the property to go to someone other than the co-owner, you would need to switch to a tenancy in common arrangement.
• Tenancy in Common and Inheritance: In tenancy in common, each person’s share can be included in their estate and left to any beneficiary. This makes tenancy in common a better option for co-owners who want control over what happens to their share after they pass away.
• Blended Families or Business Partners: For those in blended families or business partnerships, tenancy in common allows each person to designate who inherits their portion, which can help avoid disputes.

5. Changing Ownership Type

If co-owners want to change their ownership type, they can generally do so through a legal process, such as:

• Severing a Joint Tenancy: To change a joint tenancy to a tenancy in common, one or more owners must file paperwork to “sever” the joint tenancy. This will allow each co-owner to specify what happens to their share in their Will.
• Converting Tenancy in Common to Joint Tenancy: This can also be done but requires mutual agreement from all co-owners. It’s less common but may be done for simplifying inheritance planning, particularly among married couples.

6. Seek Legal Advice for Clarity

Choosing the right ownership type is essential for ensuring your property and estate align with your wishes. If you’re unsure which ownership type is best for your situation, consulting a legal professional can help. They can guide you on the benefits of each type, assist with any changes, and help with estate planning to ensure your share of the property is dealt with as you intend.

To Summarise

In Australia, how co-owned property is dealt with after an owner passes away depends on whether the property is held as joint tenants or tenants in common. Joint tenancy offers equal ownership with an automatic transfer of shares to surviving co-owners, while tenancy in common allows for individual shares that can be passed down through a Will. Understanding these options—and planning accordingly—can help ensure that your share of the property goes to the right people.