If you decide to change the way your property is owned, it is important to weigh up the advantages and disadvantages. When it comes to the severance of joint tenancy, it can be difficult to navigate all the legal intricacies. This means you may find yourself agreeing to things unwittingly, so let’s provide some clarity and identify the key changes to be aware of.
Benefits of a severance of joint tenancy
One of the best changes when switching to a tenants in common arrangement is the streamlining of ownership shares. It is far easier to divide the shares of the property and bequeath your shares in a will as opposed to the right of survivorship with a joint tenancy agreement.
It is also far easier to manage individual shares of the property. Debts or disputes regarding finances become easier to resolve, as one owner’s debts will not directly affect the other.
Should you go through a divorce, the legal protection is far greater with tenants in common. It is far simpler to divide property that is already held in predetermined shares than trying to come to an agreement on distribution after relationships have soured.
Disadvantages of a severance of joint tenancy
Easily the biggest drawback is the loss of ownership rights, which can lead to disputes. The loss of the right of survivorship can be a huge drawback, depending on your personal circumstances, and can cause you difficulty with inheritance.
You are also more liable to creditors’ interests and tax consequences, both of which may cause you to lose money. Obtaining professional help is vital for understanding all the tax implications. You can find legal experts online who cover everything from declarations of trust to the severance of joint tenancy agreements.
There are also legal implications to consider, which can become more complex with deaths or divorces. These include tax repercussions and redistributed assets and can even affect estate planning.
Once you have considered all your options and consulted a specialist, you can decide whether the change is right for you.