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Worrall Moss Martin News

Issue 30,  April 2021

What do you mean, “How do we own our property?”?   We paid for it ourselves…

We think of our land … not as static and sterile possessions
but as life giving assets to be directed by wise provisions for future days

– Franklin D Roosevelt
 
It is not uncommon for property owners to know only that they “own” their property, without knowing “how” they own it.   Sometimes, property owners mistakenly believe that they own their property in a certain way, until a current title search reveals something entirely different.

Each owner of a property may have different rights in relation to that property, depending on how the property is owned.   Importantly for the purpose of estate planning, different forms of ownership will create different results when one of the owners of a property dies.

How can property be owned by more than one person?   There are two forms of co-ownership of property.   These are joint tenancy and tenants in common.

Confusingly, it is possible for a single property to be co-owned by multiple people under both types of property ownership, making it even more difficult to determine what happens to that property when one or more of the co-owners die.

Joint tenancy:   Under a joint tenancy, each co-owner (known as a joint tenant) owns the whole asset equally with the other joint tenant/s.  
  • Survivor’s rights:  If one joint tenant dies, the other/s acquire (by right of survivorship) the whole of the property absolutely, regardless of what provision is made for the property in the deceaseds Will.   In practical terms, only the last surviving joint tenant is able to gift the property in their Will.

    Together they both own 100%

     
    Joint tenancy is the form of co-ownership often favoured by married and de facto couples, because the right of survivorship means that the property automatically passes in full to the survivor.   For many couples, whose home is their main asset, this can avoid the need to obtain probate of the Will of the first to die.   

    The right of survivorship is not always straightforward.   For example, if all joint tenants die at or about the same time, it may not be clear who survives who.   Fortunately, in Tasmania (and most States), there is a legislative presumption that dictates the order of death where there is uncertainty.   In Tasmania, the deaths are taken to have occurred in order of age, with the younger being presumed to have survived the elder.
     
  • Companies as joint tenants?   Although uncommon, it is possible for a company to co-own property as a joint tenant.   This is usually limited to circumstances where a company is one of multiple trustees of a trust, along with individuals, to ensure that the ownership of trust property transfers to the surviving trustees (including trustee companies).
     
  • Disadvantages joint tenancies:   Due to the right of survivorship, only the last surviving joint tenant is able to gift the property under their Will.  

    This can lead to unanticipated results where blended families are involved.   Because joint tenancies remove property from an estate, this form of ownership can override the interests of a joint tenant’s child or children from previous relationships, who may have expected to (and been intended to) benefit from the interest in that property.
Tenants in common:   Where a person owns property as a tenant in common with others, each owner has a distinct, and separate interest, or share, of the whole of the property.   Ownership may be in unequal shares (such as 40% and 60%) or it may be in equal shares (50% and 50%, as in the diagram below).  
 
A owns 50% and B owns 50% (but not in a physical sense)
 
  • Indivisible interests:   Although their shares are distinct and separate, each tenant in common does not have a physical share in the property that is divisible from the whole, and that is why it is called an “undivided” share. 

    This is because a tenant in common does not own any particular part of the physical property to the exclusion of the others – otherwise it would not be a form of co-ownership.   Rather, the different ownership of shares in the property is notional.

    Holding property as tenants in common can be an advantage, because it allows the parties to leave their share in the property in accordance with changing requirements over time, by altering their Will and without altering the title.
     
  • Estate property:   When a tenant in common dies, their interest forms part of their estate, and is capable of being gifted under their Will.   If no Will has been made, the interest in the property will pass under the provisions of the Intestacy Act 2010 (Tasmania).   The interest of the person who has died does not pass automatically to the remaining tenant in common.   Further complications arise in the administration of the estate if the people entitled to inherit the property are under the age of 18 years. 
     
  • Unequal shares:   Tenancy in common has an advantage of allowing the co-owners to set out the proportion in which each party holds the property, which is particularly important:
     
    • when the parties contribute different amounts towards the purchase price;   
       
    •  when the parties are in a new relationship;
       
    • when the parties are in business together; and
       
    •  for tax reasons.
       
  • Disadvantages of Tenancies in Common:   Obtaining probate of the Will for a tenant in common is unavoidable, and represents an additional expense when the tenant in common dies.   For this (and other reasons), it is vital that each tenant in common have an up-to-date estate plan to ensure that their interest in a property is dealt with, in accordance with their wishes, on their death.
Can we change “how” we own property?   Yes.

A joint tenancy may be ‘severed’ (to create a tenancy in common).   After the severance of the joint tenancy, each owner will own a share of the property outright as tenants in common.   They can then decide how it will be dealt with following their death, by making provision in their Will.

A tenancy in common can be converted into a joint tenancy by a transfer, whilst both of the tenants in common are alive.   Once this has been done, after the death of the first, the survivor will benefit from the right of survivorship and own the whole of the property absolutely.

How Can We Help?   Worrall Moss Martin Lawyers has specialist skills and experience to assist you to acquire jointly owned property in the best way, considering your needs and circumstances.   Our commercial and property team led by David Bailey can assist you to ensure that you acquire property in the correct form to best suit your current circumstances.


Alternatively, our estate planning lawyers, Kimberley Martin, Casey Goodman or Ashleigh Furminger, can provide you with advice about preparing a comprehensive estate plan, including dealing with your real property in the most effective way on your death, and ensuring that your property ownership compliments your estate planning strategy.
 
What if my Will isn’t quite right?
You have taken the important first step of deciding to prepare a Will.   All you really need to do is decide who to leave your assets to, so it should be simple right?   Well, not quite.   It is easy to be tempted by Will kits, and online Will resources in an attempt to “DIY” without the assistance of a lawyer, however doing so comes at a risk.

For a Will to be valid upon death, it must comply with certain formal requirements.   In Issue 16, we discussed those ‘formalities’ in detail.   But do all errors or mistakes in a Will, or failures to comply with some or all of the formalities, actually make a Will invalid?   The answer is: not necessarily.
  • What if my Will is undated?   Interestingly, the date that a Will is signed is not one of the essential formalities of a valid Will, so a Will is not invalid merely because it was not dated.

    However, like any other important legal document, we recommend dating a Will at the time of signing.

    If a Will is not dated, there may be doubt as to the date on which the will was created, which can lead to disputes about whether that Will was the final Will made by the deceased.   Those wishing to obtain probate of the Will will be required to provide additional evidence about the date that the Will was executed.   This may require the attesting witnesses (if they are alive, retain capacity, and can be located) to give evidence personally about the date that the Will was signed.   This delays any applications being made, and unfortunately the time take to complete the administration of the estate. 

     
  • What if my Will is unsigned?   A valid Will is one that is signed by the Willmaker in the presence of two or more witnesses, who then sign the Will in the presence of the Willmaker.   Although not a formal requirement, the Willmaker and the witnesses should sign on every page of the Will, to avoid any suggestion that the Will has been tampered with (for example, a suggestion that pages had been replaced after the document was signed). 

    Where a Will is not signed, courts have a power to recognise those documents as informal Wills.   In Issue 4, we examined the Queensland case of Re Yu [2013] QSC 322, where a document that had not even been printed (let alone signed) was admitted to probate as an informal Will, because the Court was satisfied, on the basis of the evidence presented, that the deceased intended that document to be their last Will.


    However, in the recent New South Wales case of The Estate of Bradley Scott Lyons [2021] NSWSC 197, a widower was unsuccessful in obtaining probate of her husband’s unsigned draft Will.   After an arduous (and likely expensive) court process, it was held that there was insufficient evidence to show that the deceased intended the draft document to be his final Will.
     
  • What if I sign my Will without witnesses?   If a Will is not witnessed, or is witnessed incorrectly, then it will not meet the legal requirements for a valid Will.   In the Estate of Grimm [2020] NTSC 5, a case the subject of our article on Will validity in Issue 16, even the fact that the sole witness was a Justice of the Peace was not sufficient to satisfy the formalities of Willmaking.

    Where a Willmaker purports to sign a ‘Will’ in the absence of witnesses, the Court (in addition to the requirements to recognise an informal Will) may require other evidence to prove that the deceased in fact made that document.   This may require evidence of people who recognise the deceased’s handwriting or signature, or even expert evidence comparing the signature on the document to a known signature of the deceased.
     
  • I damaged my original Will, does that matter?   Where a Will is ‘damaged’, a presumption may arise that it has been tampered with, and that the document is not the whole and unchanged Will of the deceased.

    Even the smallest amounts of damage to a document are sufficient to give rise to this suspicion.   Commonly, these are staple holes, and indents from a bulldog clip or paper clip, which indicate that a page may have been replaced or removed.


    Those wishing to obtain probate of the Will will be required to provide additional evidence about the cause of the damage, and the Court must accept that the document is in fact the complete and exact document that was signed by the deceased.   Again, this may require the attesting witnesses, those who have maintained safe custody of the Will, and potentially other people who may have knowledge about the damage (if they are alive, retain capacity, and can be located) to give evidence personally, and this will cause delay. 

    For this reason, we strongly recommend that you deposit your original Will with your lawyer for safekeeping, and let your appointed Executor know where it is stored.
     
  • Can I just rely on the dispensing powers of the Court to rectify any mistake or failure to comply with the formal requirements?   Even though these dispensing powers exist, Willmakers should not hope to rely on them to recognise their ‘Wills’ which contain formal errors.   Court applications for the recognition of informal wills can be costly, stressful, and time-consuming.

    Further, not every application to a Court for the exercise of the dispensing power is successful, and each case turns on its own facts.   This is especially the case in Tasmania, which is the only State in Australia where the Court must be satisfied “beyond a reasonable doubt” of the deceased’s intention to make their last Will.

    So as tempting (and inexpensive) as it seems, we recommend leaving that Will kit on the shelf.   The costs of getting it wrong (or even not quite right) can be staggering.
How Can We Help?   Worrall Moss Martin Lawyers has specialist skills and experience in estate planning, estate administration and estate litigation, including challenges to the validity of a Will and applications to admit an informal Will to probate.   We can assist you with any enquiries in these matters.

Please contact our estate planning lawyers, Kimberley Martin, Casey Goodman or Ashleigh Furminger, if you would like advice about preparing a comprehensive estate plan including a Will that satisfies the formal requirements of a valid Will.

If you are considering claims about the validity of a Will for a person who has died, please contact our estate administration and dispute lawyers, Kate Moss, Robert Meredith, Megan Bird or Eve Hickey.  
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