Ever bought a house, vehicle, stocks or any other asset along with your significant other, another relative or friend? 🏠 💷 This could have been for tax benefits, to help carry the financial burden or to ensure that all the people involved in the purchase have equal rights over the asset. Well, that’s a great idea! However, what if you or the other partner passes away? It’s never too soon to plan what happens to your assets when you die because life is unpredictable, isn’t it?
These assets, or the part of them that belongs to you, can easily be transferred to your preferred next of kin if you have written a will. It is also possible to donate these assets after your death, although that might require some extra documentation. After death donations of joint assets are often challenged in court and require prior written permission from all owners for authorisation.
Jointly owned assets or joint assets is a term used for anything that is owned by two or more co-owners. In most cases, legal contracts don’t allow the sale of these assets without consent from all owners. Understanding the fine points related to joint assets can often be confusing.
- What happens in case of a dispute?
- Do spouses or next-of-kin get special ownership rights over joint assets?
- What happens when one or more owners die?
For this, you need some preliminary knowledge of the different ways in which two or more people can own an asset.
How deaths affect different types of joint ownership
Joint bank accounts 💷
When spouses or civil partners 💑 (as per British law) own a bank account, it is presumed that both partners own an equal amount of the money present in it. Therefore, in case of your or your spouse’s death, the living partner gains complete ownership of this bank account. This, however, is only the default process. If your will names this money to another member of your family, the ownership is simply transferred to them.
Co-owners who are not civil partners are obliged to either prove that they own a % of the money in the account or produce a legal agreement between all owners that states so. In the absence of an agreement, it might be tough for an owner to claim ownership of the money when one of the other owners dies. There have been cases in the U.K where close family members (even parents and children!) haven’t been able to gain complete ownership of the account after the person’s death. (Note: A good contents insurance policy can sometimes help your family get reimbursed for the loss in such cases.)
Joint property and other assets 🏦
You can jointly own property and other physical assets in the following ways:
- Joint Tenancy
Joint Tenancy agreements allow all owners to hold equal rights over the asset. No owner can sell any part of this asset without the consent of all other owners. If one or more of the owners dies, the ownership is equally divided among the others.
- Tenants in common
Tenants in common can hold different percentages of the asset. Each owner is free to sell or lease (in case of property) their share of the asset. If one or more of the owners dies, their share of ownership is directly transferred to their heirs.
- Tenancy by entirety
Simply put, tenancy by entirety is an agreement that treats a married couple (civil partners) as one single owner for all legal purposes. This ownership, however, cannot be subdivided. This means that neither partner individually owns any part of the asset. It is entirely owned by both people and can only be sold or leased with common consent. In case of a person’s death, the ownership is transferred to their spouse.
How can you secure your joint assets?
It can prove incredibly difficult for your family to gain access to your joint assets after your death. In most cases, your share of the assets is by default transferred to surviving owners. This can be prevented from happening by filing for a change in the type of ownership. For TIC (Tenancy in common) agreements, you can name the heir to your joint assets in your will. You can even add clauses to your will that divide these assets among specific members of your family.
The purchase, ownership, and sale of joint assets is a fairly complex topic. All the legal jargon surrounding tenancy agreements can discourage people from actively seeking to know more about them. This prohibits them from making what could be a great personal/financial investment. 💷 While joint assets can be helpful or even necessary in certain situations, one thing we suggest by way of life insuranceis to make sure that you always get a single life insurance policy. There are many reasons for this, including getting double the payout! We encourage you to find out more about your joint assets and life insurance, and if you have more questions, our partners at JPEP would love to help. 💛