Knowledge Bank
What Happens To Jointly Owned Real Estate When Someone Passes?
Quick Answer
The outcome depends on how the property is owned.
If the owners are Joint Tenants, the interest of the owner who passes generally goes to the surviving owner or owners through the right of survivorship. The Will does not usually control that interest.
If the owners are Tenants in Common, each owner has a separate share. The share of the owner who passes generally forms part of their estate and can be dealt with under their Will.
The title to the property therefore needs to be checked rather than assuming the Will determines the outcome.
Introduction
A Will can only deal with an interest in real estate that forms part of the estate.
Where property is jointly owned, that depends on whether the owners are registered as:
- Joint Tenants; or
- Tenants in Common.
The difference may appear small on the title, but it determines whether ownership continues with the surviving owner or whether a separate share passes through the estate.
For jointly owned real estate, how it is owned may be as important as what the Will says.
Two Different Pathways
Joint Tenancy and Tenants in Common create two different outcomes after one owner passes.
Joint Tenants
The surviving owner or owners generally continue with the property.
Tenants In Common
The deceased owner’s separate share generally passes into their estate.
The property may be the same and the Will may be the same. The ownership recorded on the title determines which pathway applies.
Joint Tenants
Joint Tenants do not hold separately identified shares on the title.
Each owner has an interest in the whole property together with the other owner or owners.
When one Joint Tenant passes, their interest generally ends and the surviving owner or owners continue as the owners of the property.
The property does not usually pass through the deceased owner’s estate, even if their Will attempts to leave a share of it to someone else.
For example, a Will may say:
“I leave my half of the home to my children.”
If the home is owned as Joint Tenants, there may be no separate half-share available for the Will to distribute. The surviving owner will generally continue with the property through the right of survivorship.
Tenants In Common
Tenants in Common each hold a separately identified share in the property.
The shares may be equal or unequal. For example, the owners may hold:
- 50% each;
- 60% and 40%; or
- another agreed proportion.
When one owner passes, their share generally forms part of their estate and can be dealt with under their Will.
The surviving owner keeps their own share but does not automatically receive the deceased owner’s share.
If the deceased owner does not leave a valid Will, their share will generally be dealt with under the intestacy rules.
Where the share passes through the estate, any relevant Testamentary Trust provisions in the Will may also be able to apply to it.
Joint Tenants And Tenants In Common Compared
| Question | Joint Tenants | Tenants In Common |
|---|---|---|
| Are separate shares recorded? | No | Yes |
| What generally happens when one owner passes? | The surviving owner or owners continue with the property | The deceased owner’s share enters their estate |
| Does the Will generally control the deceased owner’s interest? | No | Yes |
| Is there a right of survivorship? | Yes | No |
Which Ownership Structure Is Appropriate?
Neither ownership structure is automatically better.
Joint Tenancy may be suitable where the intention is for the surviving owner to continue with the property.
Tenants in Common may be considered where an owner wants their separate share to pass under their Will.
The appropriate structure depends on:
- what the owners want to happen when one of them passes;
- their family and relationship circumstances;
- whether a separate share is intended to benefit other people later; and
- the legal and financial consequences of the ownership arrangement.
The decision should begin with the intended outcome rather than a general preference for one form of ownership.
One Property, Two Possible Outcomes
Alex and Jordan own their home together.
Alex’s Will leaves Alex’s interest in the home to Alex’s children.
If Alex and Jordan own the home as Joint Tenants, Jordan will generally continue as the owner after Alex passes. The instruction in Alex’s Will will not usually apply to the property.
If they own the home as Tenants in Common, Alex’s separate share will generally enter Alex’s estate and can pass under the Will.
The intention written in the Will has not changed.
The ownership structure determines whether that instruction can operate.
What About Blended Families?
In a blended family, a person may want their spouse or partner to remain secure while also preserving a benefit for children from an earlier relationship.
If the home is owned as Joint Tenants, the surviving owner will generally continue with the property regardless of what the first person’s Will says about it.
That may be exactly the intended outcome.
It may also mean that the first person no longer controls where the property eventually goes.
The ownership structure should therefore be considered alongside the wider blended-family plan rather than assumed to produce the intended result.
Can The Ownership Be Changed?
It may be possible to change ownership from Joint Tenants to Tenants in Common, or from Tenants in Common to Joint Tenants.
The change requires a formal land-title transaction.
It should not be made solely because one structure sounds more protective or flexible.
Before changing the title, the owners should consider:
- what they want to happen when one of them passes;
- the effect on their Wills;
- their family and relationship circumstances;
- any lending or mortgage arrangements; and
- any legal or taxation consequences relevant to them.
Appropriate legal and taxation advice should be obtained before the change is made.
Common Mistake
“My Will leaves my half of the house to my children, so they will receive it.”
That will generally only work if the person owns a separate share that passes through their estate.
If the property is held as Joint Tenants, the surviving owner will generally continue with the property regardless of that instruction in the Will.
Final Thoughts
A Will can only control a share of real estate that forms part of the estate.
With Joint Tenancy, the surviving owner or owners generally continue with the property.
With Tenants in Common, the deceased owner’s separate share generally passes through their estate.
The ownership structure therefore determines which part of the plan operates after one owner passes.
Checking the title allows the Will and the ownership arrangement to carry the intended outcome forward rather than relying on an assumption.