Joint tenancy is a legal arrangement where multiple people own a property equally together. If one of the owners dies, the property that is owned jointly will pass automatically to the surviving owner(s). People have used joint tenancy as an estate planning mechanism to avoid the payment of probate fees.
In Jackson v. Rosenberg, the court examined whether Mr. Jackson's transfer of his home's title to himself and Ms. Rosenberg, his late partner's great-niece, as joint tenants, was a gift or created a resulting trust in Mr. Jackson's favour. This case illustrates the importance of determining the true intent behind property transfers, particularly in estate planning contexts.
Case Background: Jackson v. Rosenberg
In the case Jackson v. Rosenberg, the question considered is whether Mr. Jackson's transfer of title of his home from himself as a sole owner to himself and Ms. Rosenberg as joint tenants, for no consideration, created a resulting trust in Mr. Jackson's favour, or whether the transfer was intended to be a gift for Ms. Rosenberg. Ms. Rosenberg was the great-niece of Mr. Jackson's long-time romantic partner.
Mr. Jackson and his partner executed a will which named the other as the sole beneficiary of their respective estates and named Ms. Rosenberg as the alternate beneficiary. Mr. Jackson and his spouse owned a condominium that Mr. Jackson sold after the death of his spouse. He used the proceeds to purchase the Port Hope property. He was the sole registered owner of this property. He paid for the property and upkeep with his own funds and Ms. Rosenberg did not make any contributions to the property nor did she reside there at any point. In 2012, Mr. Jackson transferred the property from himself as the sole owner to himself and Ms. Rosenberg as joint tenants with the right of survivorship.
In 2020, Mr. Jackson instructed his lawyer to sever the joint tenancy after Ms. Rosenberg and her husband informed him that they planned to upgrade the home so they could sell it and use the proceeds to purchase a two-storey property on a golf course and would allow Mr. Jackson to reside with them. Mr. Jackson was concerned that they would take steps to force him out of his home. Mr. Jackson claimed that he did not intend to gift a portion of the home to Ms. Rosenberg but wanted to have the property with whatever equity was left in it to pass to Ms. Rosenburg without her having to pay the probate fees. Ms. Rosenburg claims that any interest in the property transferred to her was an unconditional gift by Jackson. Mr. Jackson takes the position that the transfer was not a gift but a resulting trust with the beneficial ownership being retained by Mr. Jackson.
Presumption of Resulting Trust
This case adopts the law relating to the presumption of resulting trust as set out in Pecore v. Pecore, stating that "aresulting trust arises where the property is in one party's name, but impressed with an obligation to return the property either because the holder is a fiduciary or because the transferee gave no value for the property."
Gratuitous Transfers
They also review the law surrounding gratuitous transfer, as summarized in Bradshaw v. Hougassian, stating that:
Where a gratuitous transfer is made, there is a rebuttable presumption that the transferor intended to create a trust rather than to make a gift, on the principle that "equity presumes bargains and not gifts". The onus is on the person receiving the transfer to demonstrate that a gift was intended, failing which the transferee holds the property in trust for the transferor.
Conditions of a Gift
In determining the transferor's actual intention, the courts must weigh all of the evidence to determine, on a balance of probabilities, what the transferor intended. To establish that this property was indeed a gift to Ms. Rosenberg, she was required to satisfy the following three conditions:
- An intention to make a gift on the part of the donor without consideration or expectation of remuneration;
- An acceptance of the gift by the donee; and,
- A sufficient act of delivery or transfer of the property to complete the transaction.
The transfer of property was intended to avoid the payment of estate administrative taxes when the property was transferred to Ms. Rosenberg. The judge was satisfied that Mr. Jackson's intention at the time of transfer was to gift the right of survivorship in the property to Ms. Rosenberg, and whatever equity remained in the property after his death should pass to Ms. Rosenberg and not to his estate.
Court's Determination
The right of survivorship could not be revoked, but Mr. Jackson retained all remaining rights and interests in the Port Hope property during his lifetime. The severance of joint tenancy eliminated Ms. Rosenberg's right of survivorship with respect to Mr. Jackson's 50% share, but he could not revoke the right of survivorship with respect to Ms. Rosenberg's 50% share. This means, that when Mr. Jackson dies, his 50% share will become part of his Estate and will be distributed according to his Will. However, Ms. Rosenberg's share of whatever equity is remaining in the property will pass to her in accordance with the intention of the original 2012 transfer.
Conclusion
The court's decision emphasized that while Mr. Jackson intended to avoid probate fees by granting Ms. Rosenberg the right of survivorship, his primary intention was not to gift her the property during his lifetime. The case of Jackson v. Rosenberg highlights the complexities of joint tenancy and the importance of clearly understanding and documenting the intentions behind property transfers.
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