What happens to property owned jointly by the deceased and someone else?

Updated on 18 June 2020

This page explains what happens to the ownership of assets that are jointly owned by the deceased and someone else at the date of death. We are not legal experts so this is an overview only and advice should be sought from a qualified practitioner where there is any doubt and/or the sums are significant. 

couple holding house joint ownership (c) Shutterstock / Maha Heang 245789
(c) Shutterstock / Maha Heang 245789

The deceased had joint bank accounts. What happens to the income from them, and the balance in the accounts?

Where accounts are held in joint names of spouses or civil partners, the presumption is that the income is split equally unless the taxpayers tell HMRC that it should be split in a different proportion by sending them form 17. Note that by completing this form the joint account holders are declaring that the underlying capital (which basically means the balance in the accounts) is held in that proportion. For other joint holders, it is a question of fact as to how much capital belongs to each account holder – and each account holder is entitled to the same proportion of any interest.

For example, if Alan puts £10,000 into an account that he holds jointly with his wife, in the absence of any other information HMRC will assume that Alan and his wife each ‘own’ £5,000 of the capital and that any interest paid on the account will be split equally between Alan and his wife. But Alan and his wife might complete form 17 and file it with HMRC, declaring that Alan owns 75% of the capital while his wife owns just 25%. In that case, the interest would be allocated 75% to Alan and 25% to his wife. This would also mean that Alan was entitled to 75% of the balance of funds in the account.

Normally the balance in the account automatically transfers to the surviving joint account holder(s) on the death of one of the account holders.

What about income that is paid on a joint account after one of the account holders has died?

When one of the account holders dies, the funds in that account usually then belong to other joint account holder(s), as noted above. Continuing the example above, if Alan dies, then his wife (the other joint account holder) becomes automatically entitled to all of the funds in the account and to any interest paid on the account after Alan dies.

Let’s look at another example. Brian, Colin and Donald each put £4,000 into a joint account. Interest arising on the account is split equally so each is taxed on one third of the interest arising. If Donald dies, his share of the account automatically falls to Brian and Colin who then are entitled to 50% of the account balance each and to 50% of any interest paid on the account after Donald dies.

What happens to partnership income and assets when a partner dies?

Normally this would be covered by the partnership agreement. In many cases the capital account of the deceased would be paid to his estate, but legal advice should be sought.

What about other investments owned jointly?

Shares in companies normally follow the same principles as for bank accounts above.

For investment bonds and other types of insurance policy, you will need to contact the relevant financial institution to establish its status.

For heritable property (bricks and mortar like houses, shops and so on) see below.

The deceased owned their home jointly with someone else. What happens to it now?

This depends on how the title deeds of the property show ownership. This is something that is normally set out when a property is purchased, but can be changed later. The principles below can apply to other properties owned by the deceased, for example holiday homes, shops, warehouses, let properties, and so on.

England, Wales and Northern Ireland

In England, Wales and Northern Ireland, property may be owned as ‘joint tenants’ or ‘tenants in common’.

Where it is held as joint tenants, on the death of one of the owners, the property becomes owned by the other joint owner. For example, Joe owns a property as a joint tenant with his dad, Stan. When Stan dies the property automatically passes to Joe as sole owner.

Where property is owned as ‘tenants in common’, each person owns their separate share of the property and on the death of one of the owners it does not pass automatically to the other owner(s), but instead it will pass through the deceased’s Will or according to the laws of intestacy, if there is no Will. For example, Freda and her husband, Carl, own their family home as tenants in common. When Carl dies, his Will passes his share in the house to their son, Mike, who then owns the house jointly with his mother as tenants in common.

Scotland

In Scotland the terminology is different but the same two options are available. Normally when property is purchased jointly there is a survivorship clause, meaning that on the death of one of the joint owners, their share in the property automatically passes to the survivor(s). In order to allow a similar position to the tenants in common situation described above, this survivorship condition needs to be ‘evacuated’.

Inheritance tax treatment

Any property owned as a joint tenant (or, in Scotland with a survivorship clause intact) passes outside the Will to the other joint owner. But this does not mean that the value of the asset is ignored for inheritance tax (IHT) purposes.

Where can I get further information and help?

HMRC has a savings helpline for savings income.

GOV.UK gives some narrative on joint property ownership.

The personal savings allowance is described in our Other income section.

For further information, see our separate page Getting help with bereavement and inheritance tax.

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