For many people, careful estate planning involves more than deciding who will inherit their assets. It can also help reduce the likelihood of disputes after they pass away.
This week’s article is the first in a series detailing strategies a Will-maker can adopt to reduce the likelihood of a challenge to their estate. In some circumstances, these strategies may even prevent a challenge.
Sadly, disputes often arise over the distribution of a person’s estate.
This can be particularly true when a Will-maker has a second marriage. The estate may involve a second spouse, biological children and stepchildren, each with different interests.
How Joint Tenancy Can Assist with Estate Planning
Owning land as a joint tenant can provide a useful estate planning option for Will-makers. It may help reduce the impact of a potential challenge to their estate.
When two or more people own land as joint tenants, the surviving owner or owners generally receive the deceased owner’s interest automatically. The deceased owner’s interest therefore does not usually form part of their estate.
This can help reduce the assets available for distribution under the deceased person’s Will. In appropriate circumstances, it may also reduce the impact of a potential Will challenge.
How Does Joint Tenancy Work?
When people own property as joint tenants, the surviving joint tenant or tenants generally receive the deceased owner’s interest when they die. This process is known as the right of survivorship.
As a result, the deceased person’s interest in the jointly owned property generally passes outside their estate. The Will does not usually determine who receives that interest.
However, property ownership forms only one part of a broader estate planning strategy. Joint tenancy may not suit every situation.
Therefore, a Will-maker should consider their circumstances, family structure and overall estate planning objectives before changing property ownership.
Stamp Duty Considerations
There is no stamp duty payable on a transaction that transfers an interest in residential land from one spouse to the other if the land will become jointly owned after the transfer and will remain their principal residence.
Queensland’s Duties Act 2001 (Qld) provides this exemption, subject to the legislative requirements. Section 151 covers certain transfers between parties to a marriage, de facto relationship or civil partnership.
The exemption can apply where the parties will own the land as joint tenants or tenants in common in equal shares. The land must also become their principal residence.
The legislation also provides a specific exemption for certain transactions that arise by operation of law following the death of a joint tenant.
However, transfer duty treatment can depend on the circumstances of the transaction. For this reason, you should obtain professional advice before changing the ownership of property.
Is Joint Tenancy Right for Your Estate Plan?
Joint tenancy can provide a useful estate planning strategy in appropriate circumstances. This may be particularly relevant when a Will-maker considers how jointly owned property will pass after their death.
However, changing property ownership can have significant legal and financial consequences. Therefore, you should consider joint tenancy as part of your broader estate planning strategy.
It should not be treated as a standalone method of preventing an estate dispute.
If you are concerned about a potential estate dispute, our Will dispute lawyers can help. We can also advise you about how your assets may be dealt with after your death.
Obtaining legal advice before making changes to your estate plan can help you understand your options.
Get Advice About Your Estate Plan
This week’s article is the first in a series detailing strategies a Will-maker can adopt to reduce the likelihood of a challenge to their estate. In some circumstances, these strategies may even prevent a challenge.
If you are in the estate planning stage and want advice about strategies for dealing with potential Will challenges, our experienced lawyers can help you consider your options.
Our team can also assist if you need advice about challenging a Will or defending an estate dispute. Contact us today to discuss your circumstances and obtain advice tailored to your estate planning needs.
Read the series:
- Where There’s a Will… (Part 1): Joint Tenancy and Estate Planning
- Where There’s a Will… (Part 2): Superannuation and Binding Nominations
- Where There’s a Will… (Part 3): Asset Ownership and Estate Planning