How an asset, such as money, land or property, is inherited by a beneficiary will depend upon how it is owned by the person who is passing it on following their death and how they had planned for their estate to be distributed.
Asset ownership and distribution
Sole ownership of an asset
If an asset is owned solely by someone then generally speaking they can leave that asset how they wish in their Will.
However, in the situation where there is a Trust in respect of an asset that could instead control how that it is to be inherited. For example, a person has a life policy written in Trust for their children. On the person’s death, the policy proceeds will pay out in accordance with the Trust, even if their Will says that the assets should be inherited in another way.
Where someone owns shares in a private limited company, e.g. in a building company which they and their sibling run. They might want to leave their shares to their wife/husband on their death but in fact the company paperwork says that if they die the shares have to be offered to their sibling first.
Jointly owned assets
Where an asset is legally owned jointly, when one of the joint owners passes away, their ownership of the asset will most likely pass to the other party/parties, despite what is stated in the person’s Will.
For example, a savings account is held in the joint names of a parent and one of their children (the parent has multiple children). On the death of the parent, it is likely that ownership of the account and the monies in it will pass automatically to that child and not be shared between the other children or anyone else, as set out in the parent’s Will.
Co-ownership of property
Where a property is owned jointly, this is held either as joint tenants or as tenants in common.
If a person owns their house as joint tenants, then each party has an equal interest in that property and when one of the party passes away, ownership of their interest passes automatically to the surviving co-owner. This is the case, even if their Will says something to the contrary.
If a property is owned as tenants in common than the property is owned in either equal or specified unequal shares. When one of the named parties passes away, ownership of their share is inherited according to the terms of their Will or intestacy. It will not pass automatically to the co-owner. Often a married couple will have purchased the property as joint tenants.
The only way of checking how a property is owned is to look at the title deeds of the property and any other paperwork put in place to alter the terms of ownership.
If a person owns a property as joint tenants and they want to leave their share of it to someone other than the co-owner, they will need to convert the ownership to a tenancy in common. Converting to a tenancy in common can be done in a number of ways, such as one owner serving a notice of severance of joint tenancy on the other owner.
It’s vital to check the ownership of assets and rearrange this, if necessary, to ensure that what is stated in a Will is what will take effect when that person passes away.
How Nelsons can help
If you would like further advice in relation to the subjects discussed in this article, please contact Helen or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.