JOINT TENANCY CAN HELP – OR BITE YOU

Ever heard of joint tenancy?

It’s a way for two (or more) people to own property together, and it has a unique twist: when one owner or “joint tenant” dies, the surviving owner/joint tenant automatically becomes the owner of the whole property. This right of “survivorship” flows from holding the property as joint tenants, not as “tenants in common”  (an alternative way of owning property, where the co-owner’s half of the property goes into their own estate, not to the surviving owner).

Joint tenancy can be very convenient. Spouses often own their house as joint tenants. Since the house goes to the survivor outside the will, there’s no need to pay probate fees (effectively a provincial tax) on the value of the property. And since it doesn’t go into the estate of the joint tenant who has passed away, it’s beyond the reach of someone seeking to vary (change the terms of) the deceased person’s will.

Sometimes, in planning their estate, a parent will choose to transfer property into the name of themselves and a grown child “as joint tenants.” But here’s where it can get tricky, as a recent case highlights. What if the parent, the father in this case, soon after transferring the property into joint tenancy, has a falling-out with his son and wants to undo everything?

Ultimately, it comes down to what your intention was at the time the property was put into joint tenancy. This can be difficult to establish after the fact. Here, eight years later, after the father died, the executor of the father’s will argued that the father hadn’t intended to give the property to his son. Rather, he intended that his son would hold it for the benefit of the father’s estate.

But the B.C. Court of Appeal decided in favour of the son. It turned out that when the son and his father first met with a lawyer in early February, 2000, the father wanted to transfer all of the property to his son outright. But after an explanation of how joint tenancy works, the father decided instead to transfer the property to both himself and his son as joint tenants.

A few days after the transfer was registered, the father, who might have been drinking, had a serious falling-out with his son. So he contacted the lawyer in late February, 2000 and told him he wanted to change the property title back into his own name alone. But to do that, both he and the son would have had to sign a transfer back to the father. The father was given the transfer document but he never got it signed.

The court looked at what happened in the eight years afterwards, before the father passed away in 2008. But it said the key was that when the father signed the original transfer to himself and his son as joint tenants in February, 2000, he intended to make a gift to his son, and he understood how joint tenancy works. So the gift was complete then, and (unlike a will) couldn’t be undone afterwards by the father, acting alone.

See your lawyer for estate planning advice.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

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