Legal Tip 156: Combining Different Joint Ownership Methods

Discussion in 'Legal Issues' started by Terry_w, 12th Apr, 2017.

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  1. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    Combining Different Joint Ownership Methods



    A and B can jointly own property either as

    · Joint Tenants (JT), or

    · Tenants on Common (TIC)



    But where there are 3 or more joint owners these could be combined and mixed up. Part of the property could be owned as joint tenants and part as tenants in common.



    Example

    Mum, Dad and Son own the property.

    Mum and Dad own 50% of the property with their 50% held between them as joint tenants.

    The son owns the other 50% of the property as tenants in common with the other 50% jointly owned by the parents.


    If Mum dies first Dad will become the owner of the 50% by the law of survivorship

    If the son dies he might leave his share to his wife, in his will, so that the wife owns 50% with the mum and dad owning the other 50% between them as joint tenants.



    Another Example is where 2 couples want to own together



    Example 2

    Family A and Family B want to purchase one property together

    Family A consists of husband and wife and Family B also consists of a husband and wife.

    Family A can own 50% as tenants in common with Family B

    With Family A’s share being Husband and wife as joint tenants. Same with Family B.


    If Husband A dies Wife A will hold 50% as tenants in common with Family B.

    If Husband B dies Wife B will end up owning 50% with Wife A.

    If Wife A then dies she can leave her share to anyone via her will.



    Actually this could be possible with just 2 owners too.



    Example 2

    X and Y jointly own property as follows:

    50% TIC with X and Y owning 25% each as tenants in common

    50% TIC with X and Y owning the remaining 50% as joint tenants.

    In his will X leaves everything to Z.

    X dies

    The property would then become owned as follows:

    50% TIC with Z and Y owning 25% each as tenants in common

    50% TIC share with Y owning the remaining 50% solely.





    Note that I am not recommending property be owned this way, especially where there are many people involved. Legal advice should be sought on this sort of thing and there may be other preferred methods.
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Partitioning may also be a option is such cases so that a specific interest is identified.

    Legal advice may also identify non titled forms of ownership and beneficial methods of attaining an interest.

    For exampe a unit trust in NSW could enable a company to be the legal owner and achieve the land tax threshold and also enable parties to borrow to acquire their respective interests in a fixed manner that doesnt lead to a joint and several liability.

    One of the concerns with joint ownership is that assets pass to a death beneficiary. Can be very concerning for a spendthift, bankrupt, minor, person lacking capacity and many other impedements. Assets can be exposed and placed at risk.

    I had a good client exmple of this. Client had major concerns with asset protection. I asked about that persons parents. They are very asset rich and she is a major beneficiary. The asset protection risk was her parents dying...Best strategy was their wills becomeng testamentary. That way no inheritance occurs. Not too many people can choose to prevent inheritance but yes it can occur with legal estate planning