When the parties to a marriage or de facto relationship separate, it is important to consider how they hold their interest in assets, especially the matrimonial home. In Western Australia, it is possible to own property as joint tenants or tenants in common. Tenants in common usually hold a property with defined interests, which are often expressed in percentages. Joint tenants, on the other hand, share the ownership of the property equally and own equal undivided rights to keep or dispose of the property. If you are unsure how your property is held it is possible to do a search with Landgate by obtaining a copy of the certificate of title.
What if a joint tenant dies?
If your interest is held as joint tenants, it is important to consider how your ownership may impact upon your estate planning. It is sometimes possible to sever the joint tenancy so that the property is held as tenants in common, rather than as joint tenants. If one of the joint tenants passes, right of supervisorship applies, and the other tenant/s automatically inherits their share of the property. That is, the surviving owner becomes the sole owner of the property regardless of the intentions expressed in the deceased party’s will.
What about separation?
When a couple has separated, there is a risk when the former partners are joint tenants. However, this risk is reduced once the matter is in the Family Court of WA. This is because the Family Court may consider the value and makeup of all of the assets of the parties to the relationship irrespective of whether the legal title to the property is held as joint tenants. The court can make property settlement orders even after the death of one of the parties.
Layton v Layton
In June 2019, the Family Court delivered a decision in relation to a property that the parties to a marriage held as joint tenants. By the time the case started, the wife was living in a residential care facility and later passed away during the court proceedings. The husband remained living at the property.
The wife made a will leaving her estate to beneficiaries other than the husband. However, due to the property being held as joint tenants, the property was not part of the estate. The wife’s son sought to continue the case on behalf of the wife’s estate, the consequence of which would be that at least a partial interest in the property might be added to the wife’s estate and become available for distribution to her beneficiaries.
The court decided that the son should be allowed to continue with the case.
Unilateral severance of joint tenancies
The facts of Layton v Layton emphasise a broader issue which the Law Reform Commission of Western Australia has previously identified. This is that it should be possible to unilaterally sever a joint tenancy in Western Australia as is possible in some other Australian states.
If such an option existed in Western Australia, the consequence, in this case, would have been that the wife would have had the option to sever the joint tenancy in addition to leaving her estate to other beneficiaries than the husband. This may have meant that the court would not have had to make a decision in relation to this aspect of the matter and proceedings may have been able to be avoided altogether.
If you and a former partner are joint tenants and are considering whether to sever the joint tenancy over a real property or seeking an appropriate strategy once separated we strongly recommend that you obtain legal advice from one of our family lawyers. Further our firm can assist you with reviewing of the whole of your estate planning arrangement including your will, superannuation, life insurance policies and enduring powers of attorney and guardianship.
If you require legal advice or representation in a property law matter or in any other legal matter, please contact Go To Court Lawyers.