Joint Tenancy Vs Tenants in Common

Hi,

I’m trying to see which one would fit better in our situation.

We are married. We both earn almost same. My wife is a director of a trustee company. Trust has a dance teaching business and my wife is the teacher (small scale on weekends). I'm the appointer. I might do 'data modelling' type of contract work in the future under that Trust.

As a director, my wife could be sued. That is why I'm wondering what set up we should be buying our next IP. I don't want to buy under another trust set up at the moment. We do have public liability insurance.

Should it be Tenants in Common (1% for wife and 99% myself) OR Joint Tenancy (equal share)?

Under Joint Tenancy, All calculations (LOC, negative gearing.. etc) would be easier to calculate. Also the property goes to the other person automatically if one person dies.

Under Tenants in Common (1%:99%), property is safer if she gets sued. But is it all worth the hassle? Is it possible to join two loans where the percentage of ownership if different (but still same two names)?

Regards,
devank
 
Last edited:
Hi,

I’m trying to see which one would fit better in my situation.

We are married. We both earn almost same. My wife is a director of a trustee company. Trust has a dance teaching business and my wife is the teacher (small scale on week ends). I'm the appointer. I might do 'data modelling' type of contract work in the future.

Since, as a director, she could be sued. That is why I'm wondering what set up we should be buying out next IP. Should it be Tenants in Common (1% for wife and 99% myself) OR Joint Tenancy (equal share)?

Regards,
devank

More to consider than you may think.

Generally I think it rather pointless to own 1% of a property. This does nothing for a person really, other than force them to go onto the loan and thereby doubles the risk and also hurts serviceability.

You also have to consider estate planning issues. With a JT the survivor generally takes the share of the deceased. TIC shares can be willed to anyone. So if your estate is at risk of being challenged then JT may be safer for you to pass the share on to the person you want, being the other owner. But this may be no good if you were thinking of setting up a testamentary trust for asset protection - what if the survivor remarried, then you children could miss out.

Also asset protection while alive. If one spouse goes bankrupt then their share of the house will go to creditors. Having the house in one name offers some protection, but there are still many ways the house could end up falling into the hands of creditors - resultive trusts and constructive trusts for example.

Also what if the sole owner becomes bankrupt - the other spouse would have to argue resultive or constructive trust.
 
Thank you Terry. I revised my post while you were responding. My initial post didn't make much sense even to me :eek:
But.. some how you figured what I was asking :)

TIC - If one person becomes bankrupt then do we lose 100% of the asset or only the 50%?
 
TIC - If one person becomes bankrupt then do we lose 100% of the asset or only the 50%?

It gets tricky. Technically 50% of the property equity belongs to the creditors. What most people do in these situations is that the non-bankrupt spouse refinances the property to pay out the bankrupt's creditors. If this cannot be done then it gets dragged out.

As for your original question, I would only have one spouse as the director of any trust I would use for future property investing unless you had to rely on both of you for servicing. If your wife is running a business then it's probably best that she's not a direct 'owner' unless there is a compelling reason for it or if she is in a low risk industry.
 
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