Whenever two or more people buy a property together they must decide what relationship the joint owners will have by specifying that they own as either "joint tenants'' or "tenants-in-common''.

Joint tenants are deemed to have an equal undivided interest in the whole of the property. Upon the death of any one of them, the deceased party's share is extinguished and the property automatically vests in the survivor(s) regardless of the provisions of the deceased's will.

In comparison, tenants-in-common hold specified shares in the property which may, but need not necessarily, be equal. Upon the death of a tenant-in-common, that defined share will pass in accordance with the provisions of the deceased party's will or, if there is no will, according to the statutory provisions dealing with who inherits on intestacy.

Husbands and wives generally choose to hold property as joint tenants.

Assuming that the surviving spouse is the deceased spouse's primary beneficiary this arrangement will reduce legal expenses upon death as there is no need to produce an Assent.

This is the document vesting legal title in a beneficiary under a will, or the rules of intestacy, before the survivor can claim to be solely entitled to the property.

A joint tenancy may be inappropriate in the case of a second marriage where one spouse has children from a previous marriage.

In that case, the spouse who has children may wish to ensure that his/her share of the property is ultimately secured for the children. That can be achieved by holding the property with their spouse as tenants-in-common and making a will.

The will might provide for the surviving spouse to occupy the property for life but for the deceased's share of the property to pass to his/her children upon the surviving spouse's death.

If, using the same facts, the couple had held as joint tenants, the deceased party's share would have passed to the surviving spouse and to the beneficiaries of the surviving spouse upon the death of the survivor.

It may also be appropriate for joint owners to acquire as tenants-in-common if: The purchase price has been contributed to in unequal shares; or One party is to be solely responsible for the mortgage payments; or There is some other reason why it is advisable for the joint owners to identify each co-owner's input to the property.

Business partners or those holding property as an investment generally choose to hold property as tenants-in-common.

Where parties decide to hold as tenants-in-common, a separate Declaration of Trust might be appropriate.

The Declaration could set out the respective shares of each owner in the property. It should set out their contributions toward running costs, mortgage payments and improvements.

It might also include provisions dealing with what would happen if one of the co-owners wished to sell and the others did not (e.g. an option or obligation to purchase the other's shares in those circumstances and how the price of the share would be calculated).

Circumstances change and joint owners who originally wished to acquire as joint tenants may decide later that they wish to have defined shares in the property. They can achieve this by serving a Notice of Severance upon the other party.

The Notice may take the form of a simple letter, which states that the joint tenancy is severed and the joint owners shall henceforth hold the property as tenants-in-common. The Notice should be prepared by an attorney, in particular to ensure effective service.

A Notice of Severance is generally appropriate where joint owners are divorcing to ensure that in the event of their death the property passes to their preferred beneficiaries and not to their estranged spouse.

In the absence of formal documentation evidencing a different intention the Notice of Severance will result in the joint owners holding as tenants-in-common in equal shares.

Whether co-owners of property decide to acquire as joint tenants or tenants-in-common they should consider making a Will or, if they already have one, whether they need to amend it. This is especially important if they are holding the property as tenants-in-common so that they can direct where the property goes in the event of their death.

Joint tenancy may assist in avoiding stamp duty on death, but only where there is no need to obtain a Grant in order to administer the deceased owner's estate.

A Grant is issued by the Supreme Court and serves two main purposes.

Firstly, it establishes the authority of the deceased's personal representatives to deal with his assets and secondly, it establishes either the validity of the deceased's Will or that the deceased died intestate (without making a Will at all or without making one which remains valid at death).

If all of the other assets of the deceased joint owner are also jointly held a Grant will not be necessary.

However, if the deceased joint owner had some solely-owned assets, a Grant may be necessary in order to administer those assets. If a Grant is required, the deceased's joint property interests will be included in the estate for the purposes of assessing "death duties''.

In dealing with such matters, detailed estate planning advice should be sought.

*** Attorney Michelle Stone is a member of the Property Department at Appleby Spurling & Kempe. You can write to her with your questions at mstone yask.bm.

Copies of Ms Stone's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

*** This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.