There are two basis of law upon which you can own a property jointly with another person. By way of joint tenancy or as tenants in common. This is normally decided at the time of purchase and recorded on the transfer document which is sent to the Land Registry. It is important to establish early on in any property dispute whether you are married or cohabiting, how the land is held and whether this needs to be changed. It is common for a search of the register to be undertaken as people rarely know or recall how they hold the land at the time of purchase.
1. Beneficial Joint Tenants - ‘beneficial joint tenants’ is by far the most common arrangement in terms of holding property jointly particularly where the owners are married. Beneficial joint tenancy means there are no defined shares and if one beneficial joint owner dies then all of his or her interest in the property passes automatically to the other. This is known as the principle of survivorship. This arrangement is inappropriate, if one or more of the joint owners wish to be able to give his or her share in the property to someone other than the survivor on their death. Also if one party contributes significantly more than the other to the purchase price, and wishes to protect their contribution or to have the legal basis reflect the inequality of contribution, then the party may be advised to consider holding as beneficial tenants in common.
2. Beneficial Tenants in Common - “beneficial tenants in common” is where people own property jointly and their share in the property is recognised by law as being a separate and distinct share in the property. The individual owners can therefore dispose of their separate interest in the property in any way they choose. In particular the share can be gifted by Will and therefore the principle of survivorship does not apply. This way of holding a property is common if one party contributes more to the initial purchase price or deposit and wishes to protect that share, or where perhaps a joint owner has children by a previous marriage and wants to ensure that any money he or she is putting into the property will eventually pass to his or her children. The shares in which Tenants in Common own the property do not need to be equal. More often than not a Tenancy in Common is backed up by a Trust document setting out precisely the shares that are held.
3. Making a Will - our standard advice at Hawkins Family Law to clients who are in the process of divorcing or separating, is to have at least a holding Will pending obtaining the final part of the divorce, which is known as the Decree Absolute. Thereafter we would advise that clients go on to consider Inheritance Tax planning and draft a more permanent final Will. We advise this because until such time as you are divorced if you have no Will and were to die in advance of the Decree Absolute, because you are still married the Intestacy Rules would apply and your ex-spouse could inherit all or a significant portion of your Estate. Alternatively, you may have a Will or joint Will which leaves all of your Estate to your partner, and this may no longer be what you wish to have happen. However, depending upon the circumstances, even if you were to make a Will excluding your spouse, you should be aware that until such time as you are divorced they could potentially have a right to make a claim following your premature death, under the terms of the Inheritance (Provision for Family and Dependants) Act 1975. We would advise therefore that you consider leaving your spouse a proportion of your Estate in your holding Will pending obtaining Decree Absolute. However we are not Wills and Inheritance Tax planning specialists and would recommend that you seek your own independent advice on this topic. If you need assistance in finding a legal advisor please ask your legal advisor to recommend one.
4. Pensions on Divorce - you may have read about pension sharing and pension earmarking in the press. Often pensions can be one of the most significant assets in a marriage, particularly a long marriage, and they need to be handled very carefully by experts. If you are looking to resolve financial matters on divorce or separation then you will need to obtain information in relation to your pension provisions. You may hold for example more than one pension asset, whether it be an occupational or private pension scheme, and in addition will have your state pension. Because the Department of Work and Pensions take up to four months to provide information in relation to a state pension, we do urge you even at this early stage, to send off the 2 documents (you will find on the web page headed Property Wills and Pensions BR19 and 20) to find out what your state pension entitlement and additional state pension fund is. We also advise all of our clients to obtain a Pension Advances report where there are pensions to determine what an appropriate split should be whether that is through offsetting or Pension Attachment or Pension Order. In so far as the court is concerned there are various powers that the Court has in terms of pensions:
a. Offsetting - this is a method that can be used where the Court looks at the transfer value of the pensions and decides that one party should receive a sum, or another asset in lieu of a pension share order. Clearly this is only possible where there is capital or other resources over and above immediate needs.
b. Pension Sharing Order - the Court has power to make a pension sharing order. This means that if one party has a pension fund it can be shared with the non-pension owning spouse, and the fund is effectively separated upon Decree Absolute. Please note that a pension sharing order can only be made by the Court, either on a contested basis or by consent. It is not something you can enter into informally without the Courts authority.
c. Pension Attachment Orders are not very common. Indeed since the advent of pension sharing they are rarely used, however the Court has the power to order that a proportion of a pension, once received, both as annual income and lump sum should be paid to the other spouse. The Court also has the power to order that the proportion of any death in service benefit should be paid to the other spouse.
The significant problem with pension attachment orders that differentiates them from pension sharing orders, is that if the person who holds the pension dies before the pension pays out, then the person with the benefit of the pension attachment order will lose their share. The only way of protecting this is by way of life insurance, and if it looks as though there is going to be an issue in relation to pension attachment we would strongly recommend that independent financial advice is sought. From the legal perspective following divorce or separation, as you can see pensions can be a significant and complicated area of law. We do strongly recommend that you seek independent financial advice upon the implications of a pension sharing order or earmarking order, and also upon the ramifications in terms of a transfer out or remaining in the scheme in the event of a pension sharing order. Ultimately you need to ensure that you are adequately protected when you retire. Whilst we are able offer legal advice in relation to pensions we are not able to provide you with financial advice.
Hawkins Family Law fields 'a very professional team that delivers a high-class service and has strength-in-depth from senior to junior level'. Managing director and team head Jo Hawkins provides 'clear and accurate advice and moral support through often testing times for her clients; she focuses on deriving the best long-term outcome for her client and other parties'. The practice has particular strength financial matters, including divorce and ToLATA proceedings. Other key figures include Loraine Davenport, who has strong collaborative law expertise and handles complex children cases and high-net-worth ancillary relief matters; Annabel Hayward, who focuses on complex financial provision and co-habitation matters; and Stacey St Clair.
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What the team is known for
Boutique family law firm that punches above its weight in terms of high-value and complex matrimonial finance instructions relating to business assets, pensions and substantial property portfolios, including assisting with the handling of assets abroad. Also represents clients in the negotiation of wealth protection agreements and private law childcare arrangements. Fields a team trained in collaborative law and alternative dispute resolution.
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