Recently, Alberta's Court of Queen's Bench held an inter vivos gift of a joint interest in real property may be irrevocable where a party intended to gift an irrevocable right of survivorship.
In Pohl v Midtal, 2017 ABQB 711, a mother and father
transferred their interest in a quarter-section of farmland to
themselves and their daughter as joint tenants. The parents had
intended to live on (and farm) the quarter-section until they were
unable to do so and, thereafter, for their daughter to assume
possession of the quarter-section. Several years post-transfer, the
father's relationship with his daughter had deteriorated. The
father, on his own behalf and as the mother's attorney,
registered a transfer thereby severing the parties' joint
tenancy and rendering the daughter a tenant in common. This
transfer worked to "reduce" the daughter's joint
interest in the quarter-section to a mere one-third undivided,
common interest. The effect of this "reduction" was to
deprive the daughter of a right of survivorship (i.e., an
entitlement to the whole quarter-section upon the death of her
parents). The daughter, accordingly, brought an action against her
(deceased) parents as means of recovering her joint interest in the
quarter-section.
Briefly, the Court of Queen's bench held a party gifting a
joint interest is presumed to retain the ability to sever same. The
Court, however, held this presumption may be rebutted with evidence
indicating a gifting party intended otherwise:
There is a presumption that the right of survivorship is given with the joint tenancy in a "normal" way, preserving the ability of the parent to sever. But that presumption can be rebutted by evidence that the intention of the transferor was to give an irrevocable right of survivorship which would prevent the transferor from applying to sever the joint tenancy in the future (at para 52).
Here, the Court held this presumption of severability had been rebutted and, as such, the daughter had been gifted an irrevocable right of survivorship. That is, evidence of the parents' intentions (i.e., that their daughter would take exclusive benefit of the quarter-section upon their death) allowed for an inference they had relinquished their right of severance upon gifting her a joint interest in the quarter-section.
Accordingly, one ought to take caution when gifting a joint
interest. While the law assumes a gifting party retains his/her
right to sever a joint tenancy, care should be taken to document an
irrevocable right of survivorship has not been gifted.
Conversely, a gift of a joint interest in property with a right of
survivorship may be confirmed in a will as a means of ensuring the
intention of such a gift is understood by all parties involved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.