Joint Ownership With Right of Survivorship (Watch out!)

Posted on 2 June 2022 Back to News

Email Our Real Estate Lawyers

 

It is very common for individuals, as part of their estate plan, to place property such as bank accounts, investment certificates and homes on joint account or joint tenancy with right of survivorship with another. Often the person who shares ownership of the asset is the child of the owner of the asset. This is commonly done to avoid probate tax and to allow for easy transfer of assets on death.

1.Problems with Joint Ownership

There are, however, many reasons why very careful consideration should be given to this type of planning and why it should not be done. For example, once a child is indicated as an owner of the asset, if that child is successfully sued by a third party, the asset could be seized by the creditor. A claim could also be made against the asset or the value of the asset by the child’s spouse if he or she separates or divorces. Also, the original owner of the asset loses control over that asset; the owner cannot sell, transfer or cash in the asset (in the case of a savings certificate) without the agreement of the other joint owner. The transfer itself could also trigger capital gains tax which would be payable by the Transferor.

2.What is your “true” intention

In addition to these concerns, we are now seeing many cases where litigation is occurring after the owner’s death because there is uncertainty as to whether the owner of the asset truly intended to create a joint tenancy.

 Generally, when an asset is owned jointly with another individual, upon the death of one of the joint owners, the asset automatically becomes the property of the surviving joint owner. The asset does not form part of the deceased’s estate to be dealt with under his or her Will.

 The Courts in dealing with this issue, however, have developed what is known as “the presumption of resulting trust” particularly when assets are held jointly by parents and a child

 The presumption is that the individual (the child) who shares ownership of the joint asset with the original owner is really holding it in trust for the original owner and does not receive the asset on the original owner’s death. The asset must be held in trust for the estate to be dealt with under the owner’s Will. If the surviving joint owner wants to retain the asset for himself, he must “rebut” the presumption and prove that the deceased really intended him to receive the asset.

3. Recommendation

Oftentimes, the problems caused by transferring assets into joint names are far greater (and more costly) than any potential savings to your estate of probate tax. Before considering the transfer of any of your assets into joint names with another individual, you should review your circumstances and your estate plan with your lawyer.

 

 

This article is intended for general information purposes only and is not intended to provide legal advice. Readers with concerns about how this affects particular situations or transactions should obtain the independent review and advice of legal counsel.

Go Back

"Expedient, personal, and pleasant to deal with"

"Good service, easy to work with"

"Extremely happy with the service provided"

"Your service was excellent and very efficient"

"Top notch service. No improvement necessary"

"Good service, friendly approach"

"They’re efficient and do a great job"

NEWS AND ARTICLES

See what we have been up to

Non-Resident Speculation Tax (All You Need to Know)

    By: Joshua Clarke & Michael Hanton   This guide explains Ontario’s Non-Resident Speculation Tax (NRST), a tax on certain purchases of residential property by foreign individuals and entities. ......

Read Now

Notice to Clients: 2024 Capital Gains Changes

  The 2024 federal budget has brought unexpected news for taxpayers and tax professionals alike. The budget proposed changes to the capital gains inclusion rate, aimed at enhancing tax fairness ......

Read Now

Canada’s Foreign Buyer Ban (A Complete Guide)

  By: Joshua Clarke & Jennifer Parker   Introduction To address the growing concern of housing affordability in Canada, the federal government has extended the Prohibition on the Purchase of ......

Read Now

HGR Graham Partners Sponsors 2024 SheLeads Georgian Bay

  HGR Graham Partners LLP is pleased to be co-sponsoring SheLeads Georgian Bay with Ferguson Deacon Taws LLP as the Venue Sponsor. Join us on Saturday, May 25, 2024 for ......

Read Now

Cohabitation Agreements & Marriage Contracts

  Cohabitation and marriage contracts are agreements between partners that set out the parties’ rights and obligations in the event of their separation. They are forward looking agreements and may ......

Read Now

Temporary Help Agencies and Recruiters – ESA Changes (What You Need to Know)

    Recent changes to the Employment Standards Act (ESA) have altered the landscape for Temporary Help Agencies and Recruiters who carry on business in Ontario. Many companies across the ......

Read Now

What is Title Insurance? (What you need to know)

  A title insurance policy is a policy of indemnity that insures against loss or damage arising from title defects or other covered risks which may include survey issues, encroachments, ......

Read Now

Scroll to top