Who Keeps the Home After a Death – Tenants in Common vs Joint Tenants

Among the crucial Estate Administration tasks of an Executor (or Administrator) are identifying assets and how these are owned to establish if they form part of the Estate or if they are handled differently.

If there is property involved, how should an Executor treat property where the deceased and their spouse or partner are tenants in common vs joint tenants? How about in cases where the deceased person owns property with others as one of the tenants in common?

What about joint savings accounts? What happens to joint bank accounts when someone dies in Australia?

These are just some of the most common questions about asset ownership regarding the Administration of Deceased Estates. If you are the Executor or Administrator of a Deceased Estate where these matters are a concern, then this guide is for you. Here, we will discuss the differences between assets owned:

  • solely by the deceased person;
  • jointly with another person; and
  • as tenants in common with other parties.

1. Some Preliminary Steps

As the Executor of a Deceased Estate, you need to remember that prior to the Probate application process, you should conduct an inventory of assets and liabilities

The reason is that when you apply for Probate to the state Supreme Court, a document containing information on assets and liabilities should also be submitted. This document should state the date-of-death values of any assets and liabilities held solely by the deceased person or as tenants in common that are considered part of the Estate.

Assets that form part of the Deceased Estate include real estate property, cash kept in bank accounts, shares, digital assets and motor vehicles, as well as personal possessions like artworks, furniture, paintings and jewellery. Meanwhile, loans, personal IOUs, mortgages, credit card debt and so on are all part of the Estate liabilities.

However, this list would typically not include the following types of assets (more on these later):

  • Jointly held with another person or parties (which usually pass to the surviving joint owner)
  • Assets held in trusts (e.g., a family trust that survives after the death of a member)
  • Superannuation death benefits – except in cases where these are left expressly to the Estate (i.e., through a binding death benefit nomination) or the deceased person’s ‘legal personal representative’
  • Life insurance benefits, with the exception of the Testator (the person making the Will), elects to make their Estate their beneficiary in their insurance policies, or when no Beneficiary is named in the life insurance policies

Therefore, during the Probate application process, the Executor is tasked with collating information from any or all establishments and institutions holding assets solely owned by the deceased. They should verify the date-of-death values of these assets, typically by writing to the concerned establishments and furnishing them with certified copies of the Testator’s Will and Death Certificate.

Once the Supreme Court deems all documents to be in order and provides the Grant of Probate that formally acknowledges the validity of the Will, the appointed Executor can proceed to deal with the assets of the Estate.

In cases where no Will exists, the rules of intestacy usually apply.

2. Types of Assets and the Deceased Estate

It is imperative for the Executor or Administrator to identify all assets and liabilities and determine which form part of the Deceased Estate and which do not. Only the assets of the Deceased Estate fall under the purview of the Executor and can be used to pay off any liabilities of the Estate.

In the presence of assets that do not form part of the Estate, the Executor is expected to act accordingly to ensure the establishments holding those assets can distribute them as required by law.

One of your primary tasks as Executor is to inform of the death of the Testator. This way, they can immediately cease all communications and processes related to the assets of the deceased that they hold.

Whether you will be corresponding with banks, the Australian Taxation Office (ATO), insurance companies, superannuation fund management or a similar institution, you may be required to submit a certified copy of the Death Certificate, Grant of Probate or Letters of Administration and other pertinent documents.

Now, let’s go over the different types of assets how these are dealt with:

2.1 Real Estate Property: Sole Owner vs Tenants in Common vs Joint Tenants with right of survivorship

In terms of real Estate, a property can be owned in three ways in Australia and each affects how the Executor or Administrator deals with the asset. For example, suppose the deceased person is a landlord or owns an occupied rental property. In that case, the lease agreement will continue between the Executor or Administrator and the tenant during the Deceased Estate Administration process, and then the nominated or agreed on Beneficiaries after that, unless sold.

It is crucial to know the difference between the three types of tenancy ownership.

  • Tenants in common: Tenants in common is a popular approach to property ownership where two or more people co-own property through defined shares that may be equal or unequal. In this arrangement, the right to survivorship does not apply when a co-property owner dies. This means that the share owned by the deceased co-owner forms part of the Estate and may be sold or distributed to the Beneficiaries.
  • Joint tenants: This type of property ownership grants equal interest to the people named on the property title – for example, in the case of spouses and de facto relations. The right of survivorship usually operates when one of the joint tenants passes, meaning the surviving joint tenant gets to retain the property regardless of the deceased tenant’s Will. This means that the surviving joint owner takes on the entire property, including its liabilities, insurance and maintenance costs after changing the title into their sole name, effectively making them the sole owner.

A property owned as tenants in common allows the Executor to carry out the wishes of the deceased, while the right of survivorship applies in a joint tenancy, generally meaning that the title can be transferred to the surviving joint owner without stamp-duty applying.

  • Sole ownership: If the deceased owned the property by themselves or separately from any other party, they had a ‘sole ownership’. The ownership of the deceased was complete, meaning no other person or party has any interest in the property asset. As a result, the property would be considered part of the Deceased Estate and may be distributed to the Beneficiaries based on the instructions in the Will (if one exists). Aside from real Estate, other assets owned solely by the deceased that are not jointly owned with another party also form part of the Estate and are subject to the Will. These assets include art collections, debentures, bonds, cash, motor vehicles, shares, and units in trusts.

Our Estate inventory List (or Assets & Liabilities Inventory) automatically calculates the Estate value based on asset ownership.

2.2 Bank Accounts, Shares and Life Insurance

Bank accounts, mortgages, loans and other financial products including shares can be owned solely by the deceased person or jointly with another person. These are generally treated the same way as property described in section 2.1 above.

The Life Insurance Act of 1995 (Cth), specifically Sections 204 and 205, protects life insurance policies from being considered part of a Deceased Estate. Therefore, these cannot be made available to pay Estate debts or liabilities. However, funeral and testamentary expenses can be paid out of the policy proceeds.

Policyholders who intend for their life insurance proceeds to pay off Estate debts (besides the funeral and testamentary expenses) have three options available:

  • They could enter into an express agreement with the life insurance provider for the proceeds of their policy to be applied to estate debts.
  • They can express their intent for the policy proceeds to be applied toward any outstanding debts of the Estate in a Valid Will.
  • They could charge the money with the payment of the debt or use the proceeds as collateral to repay a debt.

Otherwise, the proceeds will be paid directly to the listed insurance beneficiaries.

In cases where no beneficiary is listed in the life insurance policy, the proceeds will be included with the Estate assets and distributed according to the Will of the Testator-policyholder.

2.3 Superannuation and Self-Managed Super Funds

Superannuation in Australia is covered by certain laws, and any funds a person saves in their super is not considered part of their Estate when they die – at least, not automatically.

When a member dies, the super trustee usually prioritises the immediate family of the deceased, such as their spouse and young children. However, this may change when the deceased person has left specific instructions as to who should receive the money through a binding Death Benefit Nomination.

With a valid Binding Death Benefit Nomination in place, the trustee of the super fund would have to pay the superannuation benefit (and any life insurance held in the super) to the named Beneficiary or Beneficiaries in the nomination.

The same can be said in the case of self-managed super funds (SMSF). When a member dies, the SMSF is usually paid out by a trustee holding the SMSF assets to a dependant or other named beneficiary of the deceased per the contract or agreement governing the SMSF.

Taking on the role of an Estate Executor or Administrator can be fraught with complexities, especially when there are different types of assets left by the Testator.

And while this guide can help provide you with basic information on asset ownership, obtaining legal advice from a probate lawyer or solicitor specialising in estate-related matters remains your best recourse.

If you need additional resources on the Estate Administration process or useful Checklists & Tools, please visit the simplyEstate website.