What happens if an estate has jointly owned assets?

• If an estate has jointly owned assets, they will be managed based on their ownership structure. 
• Some assets transfer automatically to the surviving owner, while others form part of a person’s estate and may need to go through probate.
• Estate planning early can help estates with jointly owned assets avoid unnecessary Inheritance Tax bills and complications.

Jointly owned assets in an estate are handled based on their ownership structure: some pass automatically to the surviving owner, while others are managed through the Will or intestacy rules.

When you’re dealing with the estate of a loved one, jointly owned assets can feel like one of the more confusing parts of the process. At a time already taken over by grief, this added confusion can feel like a heavy burden to bear.

On the surface, it might seem simple, if something is owned by two people, surely it just passes to the other person when one dies? And whilst in many cases, that’s true, it isn’t always the way.

The way an asset is owned plays an important role in what happens when it comes to an estate. It can affect whether probate is needed, how inheritance is distributed to beneficiaries, and even how much Inheritance Tax (IHT) is due.

Understanding this during the estate planning process can make the administration process easier for everyone involved.

If you are an executor dealing with an estate that contains jointly owned assets and are facing an Inheritance Tax bill, Provira can help.

Our Estate Advance gives executors access to up to 50% of the net value of the estate within days, allowing them to pay Inheritance Tax and any other outstanding estate expenses.

Click here to find out more about our Estate Advance.

What happens to a jointly owned property when one owner dies?

For property, when one owner dies, everything comes down to whether it is owned as joint tenants or tenants in common.

Joint tenants

If the property is owned as joint tenants, meaning parties own the property together, (in the case of married couples for example) the “right of survivorship” applies. This means the surviving owner automatically inherits the deceased’s share, regardless of what the Will says. In this case, the surviving partner simply becomes the sole owner of the property without having to go through probate.

However, even though the property passes automatically, HMRC still looks at the deceased’s share of the property when calculating the estate value. If this brings the value of the estate above the Inheritance Tax threshold, then it may be liable for payment.

If the surviving owner is a spouse or civil partner, then it is exempt from IHT.

Tenants in common

In the case that the property is owned by tenants in common, the situation is different. In this case, each person owns a defined share (for example, 50/50), and when one person dies, their share forms part of their estate. The surviving owner simply retains their 50%.

That share is then distributed according to the Will, or, if there is no Will, the rules of intestacy. If the value of the share pushes the estate’s value above the Inheritance Tax threshold, then the estate may have to pay IHT on the additional value.

In short, when it comes to property, the ownership structure should be the first thing executors look at when administering an estate.

What about joint bank accounts?

Joint bank accounts are generally treated in a similar way to joint tenancies. This is because joint bank accounts are rarely split into distinct shares.

In most cases, when one account holder dies, the remaining balance is just passed on to the surviving account holder. This happens automatically and again, means that the bank account doesn’t need to go through probate. 

However, there can be exceptions. For example, if the account was set up for convenience rather than to share the money, then the entire account may be considered part of the deceased’s estate. 

For example, if a father put his daughter’s name on his bank account to help him pay bills online more easily, then the contents of the account belong solely to him. In this case, the entire balance of the account will be considered when administering his estate.

This is why it’s important not to assume that all joint accounts are treated the same. If you’re not sure, it’s always worth checking with the bank or looking at the account agreement.

Do I need probate if all assets are in joint names?

In some cases, probate may not be needed if all assets are in joint names, but not always. 

If all assets are held as joint tenants, they pass automatically to the surviving owner, meaning there are no assets left in the estate to administer and no need for probate.

However, if any assets are held as tenants in common, probate will still be needed to deal with their portion of the estate.

Importantly, even if you don’t have to go through probate, you may still need to notify banks or change property records.

What are the complications of managing joint assets?

The main complication of managing joint assets is not having a clear picture of ownership structure. 

In the same example above, a parent may add a child to their bank account for convenience, without intending for them to inherit all the money. 

Other issues can come up when a Will is written in a way that contradicts how an asset is owned. However in this case, the legal ownership structure is more binding than the Will. 

How does Inheritance Tax work with joint assets?

This is one of the more complicated parts of dealing with joint assets. Many may think that if an asset passes automatically to a surviving owner, it is not considered liable for Inheritance Tax.

However, this isn’t the case. The value of the deceased’s share is still included when calculating the estate’s value for IHT purposes.

There are some important exceptions. For example, assets passing to a spouse or civil partner are exempt from IHT. So, if the assets are being transferred in this way, then they sit outside of the deceased’s estate. 

However, if the asset was jointly owned by brothers, for example, even though the asset passes onto the surviving brother, the deceased’s share may still be counted towards their estate and therefore potentially liable for Inheritance Tax.

For many joint asset estates, this can create a situation where tax is due, but the estate itself doesn’t have enough cash to pay it.

That’s where Provira can help. Our Estate Advance exists to help executors cover urgent estate costs like Inheritance Tax when there isn’t enough cash available to cover it.

We offer:

• Access to up to 50% of the net value of the estate
• Simple interest, not compound interest
• No early repayment teams
• A kind and compassionate team to guide you through the process

To find out more, get in touch with the team today.

How Provira can help when it comes to estates with Joint Assets

Managing an estate that includes jointly owned assets can be complicated, especially if it includes multiple assets with different ownership structures. 

Even when assets pass automatically to the surviving owner, the deceased may still have to pay Inheritance Tax on the value of their share. 

This can be particularly difficult when large chunks of the estate are tied up in property or investments, leaving little cash to cover the tax.

That’s where Provira’s Estate Advance can help.

We provide access to up to 50% of the estate’s value within days, giving executors the ability to cover urgent expenses like Inheritance Tax.

There’s no personal liability, no monthly repayments, and we only charge simple interest, not compound interest, so you never have to worry about costs compounding out of control 

If you’re dealing with an estate that includes jointly owned assets and need help paying Inheritance Tax, speak to our team to start your application today.