Did you realise that the manner in which you divide ownership of jointly held property has a significant impact on your Will?
In the event that this is not recorded accurately, your chosen beneficiaries may be disinherited.
The recent case Dunbabin & Ors v. Dunbabin provides an explanation.
A Costly Error
Michael, Timothy, Simon, and Adam were the sons of Angela and John Dunbabin, who were married.
The couple purchased their family home jointly in 1983, but there was no record of how their individual beneficial interests were held, either as:
- tenants-in-common – meaning that they each held a divisible half and were free to give their half to whoever they choose in their Wills;
- or joint tenants – meaning that upon the first death, the survivor automatically inherited the entire property, regardless of any Will made by the first-to-die.
As there was no evidence to the contrary, the court applied the well-established default position that Angela and John held the property as joint tenants at the time of purchase to determine the couple’s ownership type.
Angela and John both drafted Wills in 2003 and then drafted revised Wills in 2008, in which a trust for the first-to-“portion” die’s of the family house was established. The provisions can be summarised as follows: the surviving spouse had the right to reside in the property until their death, after which it would be distributed equally to the couple’s four sons.
Their daughter Angela passed away in December 2016, and their son Michael died in December 2019. John drafted a new will in November 2019 in which he bequeathed 75% of his whole assets (including the family house) to Simon and 25% to each of his other sons. John passed away in April of 2020.
Dispute Over Entitlements
Timothy, the widow and son of Adam and Michael, asserted to the court that Angela and John had in fact terminated their joint tenancy prior to Angela’s death. This would imply that John only held fifty percent of the land and could not transfer seventy-five percent to Simon.
The Court’s Ruling
The court examined the facts to determine whether it was more likely than not that the couple dissolved their joint tenancy when they drew out their Wills. Even though there was no permanent record of a Notice of Severance having been signed or preserved in the Will file, the Court held that the Will author had supplied evidence that he had counselled the couple of the necessity to terminate their joint tenancy. Therefore, the court concluded that the couple had terminated the tenancy.
As a result, Simon received just 75% of John’s part of the property, with the remainder passing to the others.
This example demonstrates the potential for a costly disagreement to arise if the necessary advice is not provided and the relevant information is not recorded in the Will file.
