FromTheInvestEditor

Will your property go to whoever you will it to?

ST ILLUSTRATION: ADAM LEE

The terms joint tenancy and tenancy in common can make a world of difference

With both my kids now in their 20s, it is timely to review my will. This will be my third review since my other half and I decided to write our wills in 1999.

Back then, the kids were six and five. My hubby and I were both going on separate business trips to India but on the same flight.

We drew up the wills as we wanted to appoint my parents as the kids' guardians. That way, there would be no ambiguity as to who would be responsible for the children, should anything untoward happen to us.

One pet peeve with my current will is that I can't will the apartment that I'm staying in to my kids because it was bought under joint tenancy with my other half.

In law, joint tenancy refers to the manner of holding a property where, for instance, my hubby and I each own an undivided half share of a property. Unless the joint tenancy is severed and becomes a tenancy in common, each party cannot will his share to his desired beneficiaries.

The good news is I can do something about that.

JOINT TENANCY AND TENANCY IN COMMON

What, some may wonder, is the difference between joint tenancy and tenancy in common? These are the two options homeowners have when it comes to sharing a property - as joint tenants or tenants in common.

When you own a property under joint tenancy and one owner dies, his interest in the property automatically goes to the other joint tenants. Assuming we are dealing with two joint tenants who are married, and say, one of them dies; the property will belong solely to the spouse. This is the most common and traditional way for couples to own property.

All joint tenants always own an equal share of the property so if there are two tenants, they each own 50 per cent. If there are four, each person's share is 25 per cent.

But if the couple holds the property as tenants in common, their shares will go to their respective estates on their deaths. This means the tenant's interest in the property can be passed on according to the terms of the will. If there is no will, it is distributed according to intestacy rules.

Unlike joint tenancy, tenants in common can own the property in different percentages.

As such, it is important to be clear on the holding status of your property as it will have a bearing on what happens to it when one owner dies.

This is especially important if one party has paid a larger share in buying a property and wants to have a bigger say on who should benefit from it when he dies.

Let's assume you paid more for your matrimonial home and it was bought in joint tenancy with your spouse. You discover he has an affair and file for a divorce.

It may be prudent at this point to change the holding status to that of a tenants in common so you can will your share of the property to your children.

If you fail to do this and you die before the property is split, ownership will go completely to your spouse, even if your will states otherwise.

There are other reasons why tenancy in common may be preferred.

For instance, if you have invested in a property with friends, you would want to protect your interest such that it is not automatically passed to the surviving owners, in the event that you die before selling the investment.

Another scenario where tenancy in common makes more sense is where you have children from a previous relationship.

If you have since remarried, you would want to be able to specify the percentages of your interest in the property that go to each of your offspring upon your death.

One disadvantage of tenancy in common is when the other joint tenant dies first and he has willed his share to other people, so you no longer own the whole house. If he has drawn up a will and gives the share to, say, his mother, then the house is now owned by you and his mother.

If he does not leave a will, then half of his share goes to you and the other half is shared among the children equally. If you want to sell the house, it may be more difficult and sometimes, a court order to sell may even have to be obtained.

My solution is to get the men to will the property entirely to their wives, even under tenants in common.

SWITCHING FROM JOINT TENANCY TO TENANCY IN COMMON

It would cost about $1,000 or less in legal fees and other costs to change the manner of holding from joint tenancy to tenancy in common.

Fees may vary due to several factors such as whether a bank, the CPF Board or HDB is involved or whether the other joint tenant can be located, and whether the original title deed - which is required for lodgement with the Singapore Land Authority - can be found. Some of these factors could well drive the total cost above $1,000, according to Ms Ang Kim Lan, director at Goodwins Law Corporation.

For example, if the title deed is lost and cannot be found, more work is involved in searching and then preparing documents for parties to sign declaring that the title deed is lost.

There are two main types of forms for severance: one where both joint tenants agree to the severance and one where only one party signs, assuming there are two joint tenants.

For the former, the process is faster as both parties appear together at the lawyer's office and sign at the same time, consenting to the severance.

For the latter which takes a little longer, one party will sign first. The lawyer will then serve a copy of it on the other joint tenant by registered post and then the first party will attend at the law firm to sign again, testifying that a signed copy has been sent to the other joint tenant by registered post.

The entire process typically takes three to four weeks - from signing to lodgement of the severance application to getting the title deed back reflecting the change to tenancy in common.

As for me, I'm still musing over the various considerations. Whatever decision I make, it will be in the best interests of the family.

A version of this article appeared in the print edition of The Sunday Times on September 27, 2015, with the headline 'Will your property go to whoever you will it to?'. Print Edition | Subscribe