Joint tenancy and simultaneous death: the estate planning risk advisers should not overlook

Most estate plans assume a simple sequence:

One spouse dies. The survivor receives the jointly held home, bank account or investment by survivorship. The survivor’s will then determines where the family wealth ultimately goes.

But what happens if both spouses die in the same accident or if the order of death

cannot be proved?

That is where joint tenancy can produce outcomes that neither client intended.

In Australia, jointly held assets often pass by survivorship. This means the deceased’s interest does not pass under their will. It passes automatically to the surviving joint owner. That can be simple and effective.

But in a simultaneous death or “common disaster” scenario, the question becomes:

Who is treated as having survived whom?

In Victoria, where two or more people die in circumstances where it is uncertain which of them survived the other, the legislation may deem the younger person to have survived the older person. This is sometimes referred to as the commorientes rule. That can matter enormously.

If a husband and wife own their home as joint tenants and die in circumstances where the order of death is uncertain, the younger spouse may be treated as the survivor. The jointly held asset may therefore pass first to the deemed survivor by survivorship, and then through that person’s estate.

If the spouses have different wills, children from previous relationships, or different intended beneficiaries, the final result may differ significantly from what the couple expected. This is particularly important where:-

• The clients are in a second relationship.

• one or both have children from prior relationships;

• The wills are not mirror-image wills.

• The family home or investment property is the major asset.

• Superannuation nominations do not align with the wills.

• family trusts, companies or SMSFs are part of the structure;

• One spouse’s will benefits a different group of beneficiaries.

  
  

The key point is this: The ownership structure may determine the outcome before the will is ever considered.

A well-drafted will should address survivorship, substitute beneficiaries, residue, executors, trustees, and common disaster scenarios.

In Victoria, there is also a statutory 30-day survivorship rule for gifts under a will, unless the will shows a contrary intention. That is a separate issue from joint tenancy survivorship. A will clause may control who takes a gift under the will, but it will not necessarily redirect an asset that has already passed outside the estate by survivorship.

That distinction is critical. A will cannot, by itself, redirect an asset that passes outside the estate by survivorship, a binding superannuation nomination, a trust deed mechanism or another non-estate pathway.

That is why advisers need to distinguish between:

1. Estate assets - assets controlled by the will; and

2. Non-estate assets - assets that pass outside the will.

   
   

In some cases, the appropriate planning response may be to sever a joint tenancy and hold property as tenants in common. That allows each client’s share to pass under their own will, often through testamentary trust planning.

That is not always the right answer. Joint tenancy remains simple and effective for many couples. But it should never be treated as neutral. It is a dispositive mechanism in its own right.

At Inherit Australia, this is one of the reasons we believe estate planning conversations need to go beyond “who gets what under the will?”

The better question is: How will each asset actually pass when death occurs?

That requires advisers and lawyers to map ownership, superannuation nominations, trust control, company interests, insurance proceeds and testamentary intentions as part of one integrated plan.

A practical adviser checklist:

• Confirm how major assets are owned.

• Identify what passes under the will and what does not.

• Review survivorship assumptions.

• Ask what happens if both spouses die together or within a short period of each other.

• Check common disaster and substitute gift clauses.

• Consider whether joint tenancy supports the intended plan.

• Review superannuation nominations.

• Align trust, company, SMSF and insurance documents.

• Pay special attention to blended family arrangements.

• Record the advice and the reason for the chosen structure.

• Review the plan after marriage, separation, refinance, property acquisition, business changes or changes in family circumstances.

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Simultaneous death planning may feel like a remote risk. But when it arises, it can

determine the destination of substantial family wealth.

Estate planning is not just about having a will. It is about making sure the will, asset ownership, superannuation nominations and entity control documents all point in the same direction.