If you own a home, a recreational property, or some other piece
of real property, what is the best way to deal with it in your
estate plan? Many people choose to add their spouse or children on
title of their property in joint tenancy. Being a joint tenant
means that you and the other person are both legal owners of the
property, and if one of you dies, the other receives the property
by right (known as the "right of survivorship").
There are many advantages to passing property in this way:
If you die, the other owner takes possession of the property
immediately upon your death. She does not need to wait for your
estate to go through probate.
Because the property does not fall into your estate, it is not
subject to probate fees.
The property may be protected from creditors of your
If anyone applies to vary the terms of your Will, the property
does not form part of the estate.
Unfortunately, there are some significant problems with placing
property in joint tenancy. As a joint tenant, the other owner can
sever the tenancy at any time. Once the joint tenancy is severed,
the right of survivorship is lost (instead, both tenants have an
interest that will pass into their estate, defeating the purpose of
the joint tenancy). You may have to sue the other owner to recover
your interest in (and control over) the property. There is more bad
news. Unlike a will, which you can change any time, you cannot
unilaterally revoke joint tenancy if you decide you do not want to
leave your property to the other owner.
For years, Canadian courts have witnessed the fallout of joint
tenancies gone awry. Here are three recent examples to ponder.
In the Saskatchewan case of Bradford v. Lyell, 2013 SKQB 330, Gladys
Lyell transferred title of her condo into joint tenancy with her
granddaughter, Alana Lyell, in 2003. The lawyer who assisted her
advised the court that Gladys' intention was "that she
wished to give Alana a share of her estate by gifting to her this
condominium." In 2009, Gladys revised her will to state
"I do not want my granddaughter, Alana Lyell, to have any
share of my condo..." Gladys also asked her lawyer to have
Alana removed from title as a joint tenant. Before this could
happen, Gladys died.
Despite Gladys' change of intention in 2009, the court
concluded that her intention in 2003 when she transferred title to
Alana was that the property was a gift. The court held, at para.
13, "The gift is complete when the joint title is created if
the intent of the transferor at the time is to gift the beneficial
ownership of the property that remains at the time of his or her
death to the transferee." In other words, Alana received
the property because of the joint tenancy, despite that Gladys
changed her mind.
A few months later, the B.C. Court of Appeal dealt with a
similar case in Bergen v. Bergen, 2013 BCCA 492. Mr. and
Mrs. Bergen had invested in some land, and asked their son, Robert,
to construct a house on the property. The Bergens added Robert as a
joint tenant of the property. Their intention "was that Robert
would eventually inherit the property and this would ensure that
the property by-passed probate." Robert believed that his
parents were gifting the property and house to him outright. When
the house was complete, the Bergens moved in, though their
relationship with Robert deteriorated over the
The Bergens started an action to recover the interest Robert
held in the property. At trial, the judge found for the Bergens,
concluding that "nothing in evidence, however, displaces the
presumption that the property and improvements purchased entirely
with funds advanced by the [Bergens] is held on a resulting trust
in their favour..." The appellate court agreed, and held that
a transfer of title does not in and of itself signify an immediate
gift of title, regardless of the transferor's intention. If
Robert wished to assert an immediate and absolute gift, he had to
prove that this was his parents' intention.
In March, the Ontario Court of Appeal heard Kavanagh v. Lajoie, 2014 ONCA 187, a
dispute between brother Mark and sister Laurie. In 2005, their
father, Donald, had added Mark as a joint tenant of Donald's
Ottawa home. In 2009, Donald severed the joint tenancy with Mark
and transferred his interest to Laurie. Mark did not learn of this
until after Donald died in 2010, and Mark realized that he did not
have outright title to the Ottawa home. He started an action to
recover Laurie's half of the property. He argued that the whole
of the property had been gifted to him outright in 2005. Both the
trial and appellate courts rejected his argument. The appellate
court cited Bergen, and stated that the gift was
incomplete, leaving Donald free to change his mind.
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.
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It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
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