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What Is Beneficial Interest?

Question:

Answer:

The concept of having a beneficial interest in property is a feature of the law of England and Wales.

In broad terms a person has a beneficial interest in property and its income when he or she has the right to use that property and that income as he or she wishes. In such circumstances he or she is said to be beneficially entitled to the property and the income.

Where property is in the joint names of a husband and wife the determination of their beneficial interests under general law can be very complex. You should not try to advise a husband and wife how to determine their beneficial interests in property that they hold jointly. But the following information may be helpful in responding to general questions from taxpayers. Property in joint names may be held in two ways:

in common ownership (in England and Wales the owners will often be called tenants in common), in joint ownership (in England and Wales the owners will often be called joint tenants).

Scottish law does not recognise the concept of beneficial ownership in the context of jointly held property. But it does recognise the concepts of common ownership and joint ownership of property.

A husband and wife own property as tenants in common if each is entitled to a separate and identifiable share in the property. The shares in which the property is owned need not be equal. And the ownership of the capital may differ from each spouse’s entitlement to a share in the income. For example, a husband could own 60 per cent of the capital but be entitled to only 40 per cent of the income. On the death of the first common owner their share passes to their successor under the terms of their will or the rules of intestacy.

Property is in joint ownership where both the husband and wife are entitled jointly to the whole of the funds invested in the property and the income arising from it. There will be no division of either the capital or the income between husband and wife. It will be irrelevant who has contributed the most to the funds representing the property. Where one of the joint tenants dies the survivor automatically succeeds to sole ownership of the whole property. The most common types of income-producing property held in joint ownership are bank accounts and building society accounts.

Any problems about jointly held property that you cannot deal with by reference to the above should be submitted to

IR Trusts Bootle where the property is in England, Wales or Northern Ireland
IR Trusts Edinburgh where the property is in Scotland.

Thank you for letting me help you.

Jon

If you have a bankruptcy question you’d like to ask, just ask using this online form. All help is free.