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Property Ownership Choices   

For many New Zealanders, their home is their biggest asset so it’s worth taking some time to think about the way you own your home.

There are two common legal forms of property ownership in New Zealand.  A majority of couples own their properties as Joint Tenants.  The significant feature of this form of ownership is that on the death of the first partner, the property automatically passes to the survivor by way of a rule of law known as Survivorship. It does not form part of the estate of the deceased partner and so the wishes in their Will regarding the property do not apply.  The surviving partner will take the entire property in his or her own name.

The second common form of legal ownership where two (or more) people own property together is Tenants in Common.  Quite simply, this form of ownership allows for property to be owned in distinct shares.  Most commonly as tenants in common in equal shares.  Significantly, the rule of survivorship does not apply and as a consequence what happens to your share of the property on your death depends entirely on what you state in your Will.

When a property is owned as Tenants in Common, often a couple will leave a Life Interest in their share of the property to their spouse or partner in their Will, with their share then going to their chosen beneficiaries, often their children, after the death of the survivor. This has the benefit of safeguarding your half share of the asset for your intended beneficiaries. In the case of an application by the survivor for a Residential Care Subsidy, under the current policy, only the income from a life interest asset is assessed.

Another option is to allow a spouse or partner to have the right to live in the property for life or until they enter into a new relationship, whichever happens earlier, with the estate’s share then to be paid out and distributed to the residue beneficiaries, normally the deceased partner’s children. This is useful in the event of a second marriage or whenever a partner has children from a previous relationship, to ensure that they are providing for them in their Will as required by the Family Protection Act 1955.

You are able to change the ownership of your home from joint tenants to tenants in common at any time. It is essential that you update your Will at the same time to deal with the share of the home that will then come into your estate and to set out any life interest provisions you may require.

As with all areas of law, it is important that you seek good advice from a team who understand how this area may impact on you.  At Harmans we have experience dealing with estate planning strategies.  Give Phillipa Shaw a call on 03 352 2293 to arrange an appointment to discuss your situation.

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