This page is about joint ownership of assets (houses and savings) for probate and estate disputes
For information on ‘beneficiary designations’ click here.
For information about joint ownership in estate planning click here.
Joint ownership with a right of survivorship is not the same as ownership by tenants-in-common: the difference is explained here
General principles
When real estate is owned by two or more owners as ‘joint tenants with a right of survivorship’, title to the property does not ‘pass’ on the death of a co-owner. The deceased co-owner simply ‘drops off title’ and the surviving co-owner(s) remain on title. [Note that “joint tenancy” is very different from “tenants-in-common”. A title search to verify title to real estate is always useful.]
The same principle applies to ‘joint bank accounts’ and ‘joint investment accounts’ (joint ownership is not the same as a beneficiary designation for a registered account such as a RRSP, RRIF or TFSA – more about beneficiary designations here.): the deceased joint owner simply drops off ownership, leaving the survivor the sole owner.
For real estate in Ontario, this change in ownership on the death of one joint owner is registered by registering a ‘deed of transmission’, which requires little more than an original or notarized copy of the death certificate. Probate of the estate is not required.
As a general rule, if a co-owner ‘goes bankrupt’ or is sued by a creditor before they die, then their ‘share’ of the property is included in their assets – and this share must be ‘sold’ (to the co-owner(s) or third parties) to pay debts of the bankrupt/debtor. However, if the co-owner dies and is not yet bankrupt but has debts, generally their debts do NOT remain against the property which they are no longer an owner of.
Joint with an adult child
Estate law presumes that a financially independent adult child who co-owns an asset with their parent holds it in trust for the parent’s estate. This is called The Rebuttable Presumption of Resulting Trust.
The presumption of resulting trust applies to real estate and unregistered savings and investments. It likely does not apply to plans with designated beneficiaries.
The presumption is rebuttable. It is still possible for the adult child to prove that the deceased intended to give the property exclusively to that adult child, but the onus of proving this gift on a balance of probabilities rests on the adult child. Generally, clear and compelling evidence that corroborates the evidence of the adult child is required. This can be in writing from the deceased or from third parties other than the adult child. A simple oral statement from the joint child owner that “mom wanted me to have this money” is unlikely to be sufficient to rebut the presumption.
In summary, on the death of the parent, real estate and bank accounts jointly held with an adult child do not automatically pass to the child who is the joint owner, and likely should be disclosed in the probate application (EAT paid accordingly) and distributed among the beneficiaries of the estate.
This presumption is relevant to estate law only – it does not apply to tax law, family law, or debtor-creditor law. CRA, or the co-owner’s ex-spouse or other creditor is entitled to take the position that the co-owner truly is a co-owner of the property.
If you are affected by a joint tenancy claim by an adult child of the deceased
If an adult child claims joint ownership of assets with their deceased parent, the estate will be reduced. Sometimes the reduction is dramatic (especially with houses and large savings accounts).
The key for all parties is documentation (letters, emails, bank documents, etc.) –
- did the parent document an intention to gift the asset?
- what is the asset, where is it located, and how much is it worth?
- when was the joint tenancy established?
- did the deceased receive legal advice at the time?
- did the deceased consider the joint ownership when making their will?
- has the adult child joint owner refused to treat the asset as an estate asset?
The more documentation, the quicker and easier it is for us (and a Court) to address the issue.
These disputes are usually best handled by commencing an “Application for Directions” asking the Court for a ruling on whether the jointly owned asset is held in trust by the adult child for the benefit of the beneficiaries of the estate of the deceased parent. Learn more about Applications here. The key is to toss the burden of proof on to the adult child and to force them to prove that they are entitled to the money.
It is important to avoid dealing with these issues by way of trial if at all possible, because trials take much longer to schedule than applications and are a much more expensive proceedings.
We have considerable experience assisting with these circumstances by commencing court proceedings to force resolution as quickly as possible, including conducting a number of these cases ‘on success’ (contingency).
Please contact us for a consultation on your circumstances.