Making sense of tenants in common and joint tenants
Q&A: Dominic Coyle
There are essentially two ways property – including a joint account – can be held between two or more people
You wrote a couple of weeks ago in relation to joint accounts and said that “the assets in a spousal joint account will pass to the surviving spouse under what is called ‘survivorship’ ”.
Please advise what is the position with regard to any other joint account – ie in the names of a parent and child, two siblings, uncle/aunt and nephew/niece or two unrelated people.
Ms. P. D., email
It depends on two concepts that sound fairly complex but which are, in essence, quite straightforward.
There are essentially two ways property – including a joint account – can be held between two or more people. Either the owners of the account can act as “tenants in common” or they can act as “joint tenants”. The same applies to other property, with multiple owners, such as a house.
The second of these concepts is the one to which I was referring in that reply a couple of weeks ago. In the case of joint tenants, each owner is considered to be equally entitled to the proceeds of the account – or any other property they share.
If one owner dies, the monies in the account pass directly by way of survivorship to the other joint tenant, or tenants. If there are more that two account owners, the same process occurs on each death until there remains only one owner of whatever remains in the account at that stage.
The key thing is that the asset – the bank account, property, or whatever – does not form part of the dead person’s estate. They pass directly to the survivor.
However, don’t assume that this means you will have no inheritance tax bill. Survivorship merely determines who receives the money or asset. In the case of a joint account, you then need to determine how much was put into the account by each party and the amount from the deceased party is the value of the inheritance to the other signatories. If this sum exceeds the inheritance tax threshold, you’ll still have an inheritance tax bill.
Moving now to tenants in common, the difference is that each owner of the asset – or bank account – is presumed to be the absolute owner of the amount they personally invested in the account, property etc. When they die, this amount does pass to their estate and is managed by the executor of the estate or the personal representative.
The money in the account owned by the deceased is then disposed of in accordance with the terms of the will or, in its absence, under the rules of intestacy.
The two big practical differences are that, under tenants in common, the account may effectively be frozen with other account holders shut out while it is processed.
Secondly, there is no presumption that the money in the account – or the share in any other asset – will go to the fellow account holder(s).
Finally, it is, of course, possible for two people to own some asset within a joint tenancy and others as tenants in common.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice