REGULATING TRUSTS OF LAND (BANKRUPTCY)
Once property is co-owned there is imposed upon it a statutory trust. A trust of land composes of the legal and equitable title. The legal title comprises the trustees, whereas the equitable title comprises the beneficiaries. The beneficiaries are the persons with the interest in the trust property, whereas the trustees have the duty to maintain the property and see that it is dealt with in the interests of the person who created the trust. In the situation of statutorily imposed trusts, it is more frequent that the legal and equitable title owners are the same person (e.g. husband and wife who co-own a family home). In this instance they hold the property on trust for themselves, thus there is little effect of the property being held on trust.
The legal title can only be held by way of unseverable joint tenancy, but the equitable title can be held by joint tenancy or tenancy in common. The presumption is that equity follows the law, and thus the equitable title is presumed to be held as a joint tenancy, unless there are contrary words, etc. So a husband and wife will usually hold the equitable title as joint tenants.
However, in the event that, in this instance, that husband is declared bankrupt, this will have the effect of severing the equitable joint tenancy, creating a tenancy in common (remember that the legal title cannot be severed and so it would remain a joint tenancy). The tenancy in common is not subject to the right of survivorship and thus the husband and wife now have separate, but as yet undivided, shares in the property. Where bankruptcy arises, a trustee in bankruptcy is appointed and takes on the husband's equitable share in the property. So now the equitable title is held by the wife and the trustee in bankruptcy (not the husband) in, usually, 50/50 shares. As the legal title can only be changed expressly, the husband and wife remain the joint legal title holders.