Owning property with someone else—whether it’s a partner, friend, or family member—is increasingly common. But did you know joint ownership can create complications if it’s not properly documented in your Will?
In this article, we explore:
- The different types of joint property ownership
- Why making a Will is essential
- The benefits of a Declaration of Trust
- When you may need to register with HMRC’s Trust Registration Service
Types of Joint Property Ownership
There are two main ways to jointly own property in England and Wales:
1. Joint Tenants
– Both owners hold the property equally.
– When one person dies, their share passes automatically to the other, regardless of what their Will says.
2. Tenants in Common
– Each person owns a specific share of the property (which may be unequal).
– On death, their share passes according to their Will—or intestacy rules if there’s no Will in place.
Knowing the difference is crucial. It can affect who inherits your share of the property.
Why You Should Make a Will
If you jointly own property, a valid Will is essential—especially if you’re tenants in common. Without one:
– Your share might not go to your intended beneficiaries.
– It can cause disputes among family or surviving co-owners.
– It may create unexpected delays and costs during probate.
Even joint tenants should consider making a Will. Your overall estate, family needs, or future plans may warrant it.
Declaration of Trust: Added Protection
A Declaration of Trust clearly outlines each person’s financial interest in a jointly owned property. It’s especially useful if:
– You’ve contributed unequally to the deposit or mortgage.
– One party has paid for improvements or renovations.
– You want to protect a share for children or family members.
A Declaration can also include instructions for:
– What happens on sale
– What happens if one party dies
– How proceeds should be divided
This document complements your Will and provides clarity now—and in the future.
HMRC Trust Registration Service (TRS)
Did you know some Declarations of Trust now need to be registered with HMRC?
As of September 2022, many non-taxable trusts (including property trusts) must be registered with the Trust Registration Service. If you don’t:
– You could face penalties from HMRC
– The property may be harder to sell or refinance
– Executors may encounter delays and extra admin
Tip: If you’re tenants in common and have a Declaration of Trust, you may be required to register. It’s always worth checking.
What You Should Do Now
If you own property jointly, protect your interests by taking these simple steps:
– Make or review your Will
– Create a Declaration of Trust if your ownership isn’t 50/50
– Check if you need to register the trust with HMRC
Need Advice?
We’re here to help. Whether you’re buying property, updating your Will, or formalising a Declaration of Trust, we can guide you through the process with clear, jargon-free advice.
Contact us today to arrange a consultation.
