Holding an asset (e.g. a residential property) as a joint tenant means that when one joint tenant dies, the property will not form part of their estate but will pass automatically to the remaining joint tenant(s) by survivorship regardless of what the deceased person’s Will says.
However, in NSW, if a person held an interest in a property as a joint tenant and failed to sever that joint tenancy prior to their death, the person’s interest in that property can be treated by the Court in certain circumstances as part of their ‘notional estate’. This means that if family provision claim is made against the deceased person’s estate after they have died, their jointly held property may not be automatically protected and may form part of the estate for division amongst the beneficiaries and the person making the claim. If the Court was to make such an order, then the surviving joint tenant(s) would not obtain the benefit of the whole of the property.
Similarly, if a person holds an interest in an asset and transfers that interest for less than full market value, then that interest may also be treated by the Court as forming part of their ‘notional estate’ in certain circumstances.
This part of the law is extremely complex. It is important to obtain legal advice if you are concerned about this issue. At Matthews Folbigg Lawyers Parramatta we can consider your asset ownership structures and provide estate planning advice to help reduce the risk of a family provision claim being made against your Will later down the track.
Contact a lawyer in our estate planning team today to discuss how your wishes can be implemented and create or update your Will in line with your best interests.
Phillip Brophy – email@example.com or 9635 7966