What Is The Right Of Survivorship?
The right of survivorship is an important part of joint tenancy. Read more about when and how this may apply to you and your property in this guide.
Joint ownership of property is common in today’s society. It may exist due to family, business or marital arrangements. The most likely scenario being a husband and wife enjoying concurrent ownership of their house. The right of survivorship is an attribute or element of joint ownership. When jointly owned property includes a right of survivorship, the surviving owner automatically absorbs a dying owner’s share of the property. Unlike property granted in a will, the right of survivorship exists as a separate principle outside of this. In this article, we’ll discuss what the right of survivorship is and when it applies.
Joint tenancy versus tenancy in common
When it comes to real estate, a form of property, there are two types of proprietary interests. Firstly, there is joint tenancy. This is when parties own property as joint tenants. This means that:
- All joint tenants have equal ownership and interest in the property
- A right of survivorship exists
Secondly, there is tenancy in common. This is when parties own property as tenants in common. It means that:
- Two or more people co-own a property in defined shares that they can dispose of as they wish
- The shares owned by each tenant in common can be equal or unequal. For example, one person may own 75% of the shares with the other owning 25%
- A tenant in common can sell their shares in the property or give them away in a will
- Accordingly, this means that there is no right of survivorship
Generally, when two people are purchasing a property, the law will assume joint tenancy unless otherwise specified. If you are considering the purchase of a property along with somebody else, it could be useful to consult a property lawyer to explore your ownership options.
Ending a joint tenancy
There are a number of reasons why you may wish to alter a property arrangement. You may be making adjustments to a will. Furthermore, you might be going through a relationship breakdown or divorce. Additionally, you may even be refinancing, or readjusting the structure of your investments. Whatever the case may be, ending a joint tenancy could be an important step in this process. This can be done in the following ways:
- If the property is sold to a third party
- When joint tenant A transfers their interest to joint tenant B (meaning joint tenant B owns the property in full)
- When one of the joint tenants unilaterally severs the joint tenancy (this can be done to protect the interest of one of the joint tenants in the case of a relationship breakdown)
In the instance of severance of joint tenancy, the right of survivorship that coincided with that joint tenancy will dissolve. In the event that you are making plans for the future and need to consider your options, consulting with a succession lawyer is advised.
Along with the right of survivorship comes various other legal obligations relating to tax. It is important to be aware of how these may impact upon your arrangement. For example, the laws relating to capital gains tax if or when you were to sell the property you jointly owned after the death of the other joint tenant. The Australian Taxation Office website contains more information on this.
It is common for circumstances in your life to change. Sometimes, the unexpected happens. In these instances, it is recommended you know and understand your rights in respect of property. The right of survivorship is an important component of this. When making the appropriate plans for your future, seeking the advice of an estate planning lawyer is highly recommended to ensure all bases are covered.
Paul is an intern at Lawpath, and is currently studying a combined Arts/Laws degree with a major in criminology at Macquarie University. Paul has an interest in legal tech, which complements his broader interest in cyber crime/security and the way in which it is changing the world.