Buying a property with your partner is usually an exciting time in both your lives, whether you are taking your first step onto the property ladder, moving somewhere with a view to raising a family, or just hoping to snap up the house of your dreams. You could be forgiven for being swept up in all of this excitement. In these moments, your conveyancer will have the unenviable task of asking you to consider the “what ifs”. What if you split up, or what if one of you dies? It is never easy to contemplate these ‘what ifs’ but it’s sensible to do so when you’re buying in joint names and you aren’t married or in a civil partnership.”
When a couple jointly buys property in Scotland, they will be presented with two options for their joint ownership: pro indiviso shares or in “survivorship”. Each choice has advantages and disadvantages, with each couple’s circumstances and personal preferences dictating which will suit them best. This affects a significant proportion of the population: as of 2019, young couples were almost five times as likely to buy a home as their single counterparts.
Where a property is held in pro indiviso shares and a joint owner dies, one or more legal processes will be required to transfer this share to whoever they should wish to inherit this asset – whether that be the other joint owner or not. One advantage of this position is that you will have more control over what happens to your share of the property, with the freedom to leave your share in the property to someone other than the surviving joint owner. This would be helpful if, for instance, you have children from a previous relationship who you would like to benefit from your estate. Holding title in pro indiviso shares will also allow you to implement certain estate planning measures. The disadvantages come in the form of the extra administrative burden and costs required to effect any transfer.
Where a property is jointly owned in survivorship, the death of a joint owner will lead to their share automatically transferring to the surviving joint owner, without the need for any legal process. This will happen irrespective of the provisions of your Will. The advantages and disadvantages are now reversed: there will be no administrative burden or extra costs to transfer your share of the property, but you will have no control over where this share goes. If you are seeking to bequeath your share of the property to the surviving joint owner, then this will be a viable option, although you should still take advice if you are concerned about care home costs or inheritance tax.
If you jointly own a property in survivorship and decide that you would like to change this, don’t panic. The survivorship destination can be “evacuated”, although this will require the agreement of all joint owners except in some limited circumstances. This will leave the property in pro indiviso shares with the associated advantages and disadvantages outlined above.
What may at first seem a minor detail can have serious implications for what happens to your assets after you die. Whether you are concerned about protecting your children’s inheritance, considering planning for care home costs or inheritance tax, or you are seeking to reduce the administrative and financial burden on your loved ones after you have passed away, the existence or absence of a survivorship destination will be a fundamental consideration.
Thorntons’ experienced property team will discuss these options for taking title to property with clients who are purchasing a property jointly, and will help you to make the right choice for you. Should you wish to discuss changing the way in which you hold the title to your current property for estate planning purposes, we will work collaboratively with our Wills, Trusts and Succession team to find a solution that works for you and your family.
If you would like to discuss owning a property in joint names please contact our specialist property team on 03330 430350 or email sdrake@thorntons-law.co.uk.
