Ruining a True Joint Tenancy: it’s easier than you think
By Tim Janzen, Notary Public
Ever wondered about whether you should add one of your adult children on title with you as a joint tenant in order to “make things simpler”, or to avoid probate? In some cases, adding a child on title to property doesn’t necessarily do what you, as the parent, are expecting. It can also result in some very complicated legal battles after you have died.
When you ask your notary or lawyer to add someone on title with you as a joint tenant owner, be prepared to talk to us about whether you want that person to be a “true joint tenant owner”, or a “joint tenant in name only”.
A true joint tenancy must meet 4 criteria:
- unity of time: all of the owners’ interests must all be created at the same time
- unity of title: the ownership interests must be created using the same document
- unity of interest: the owners must all have the same interest in the property
- unity of possession: each of the owners has a right to possess the whole property
True joint tenancies come with rights of survivorship. This means that if one joint tenant passes away, the remaining joint tenant (or tenants, if there are more than one) takes a copy of your death certificate to the asset holder or registrar (the bank, or the land title office, for example), fills out some paperwork, and the asset is put into their name as surviving joint tenant. No probate is required.
Probate is the process in which your executor formally asks the court to acknowledge your Will, and to recognize their appointment as your Executor. Probate isn’t always necessary. While there are some good reasons for wanting to go through probate, it is a formal court process which takes time, and involves expenses and fees.
Most spouses, for example, own their home together as true joint tenant owners.
A joint tenancy in name only happens when only some (but not all) of these four criteria are met. It may look like a joint tenancy superficially, but it really isn’t. Rights of survivorship do not automatically happen when you have a joint tenancy in name only. The property might actually end up being held in trust – a kind of trust called a resulting trust.
For example, consider a mother who puts her eldest son on title to her home, to make things “simpler”, or to “avoid probate”. She still thinks of the home as hers alone, and her son doesn’t pay anything to her for the property when he goes on title, nor does he contribute to any of the expenses or upkeep for it. Son doesn’t live there and Mom would be horrified if he tried to move in with her. Mom expects that she would get all of the sales proceeds if she sells the property, and does not expect son to get anything if she sells it while she is still alive. Mom also expects son to share this property with his 2 siblings if she still owns it when she dies.
In this case, this is a joint tenancy in name only: son does not have unity of possession (Mom has not given him an equal right to possess the whole property), nor does he have unity of interest (he will not share equally in the sales proceeds when and if the house is sold, and he is expected to share the proceeds of sale with his siblings if Mom has died).
Joint tenancies in name only do not usually have rights of survivorship: in the example given above, a judge might in fact decide that the son holds the property in a resulting trust for the benefit of mom’s estate. If the property was subject to a resulting trust, it would have to be included in a probate application, and it (or its proceeds of sale) distributed according to the terms of mom’s will.
Joint tenant owners might have to prove that they have a true joint tenancy, rather than a resulting trust, or a joint tenancy in name only. That can be difficult to do, especially if you are one of several children. This is where legal battles start.
Properly prepared documentation can really help here:
- a Deed of Gift can show that you meant the other owner to have this property by right of survivorship after you died
- a co-ownership agreement can help document that this was a true joint tenancy
- a marriage contract, pre-nuptial agreement or co-habitation agreement can document intentions with respect to property
- a trust deed, or a declaration of trust can set out the fact that this was a joint tenancy in name only, and talk about what was to happen on the death of one of the owners
- a declaration in a Will can set out your intentions with respect to the property after you died
- even informal letters or notes can set out your intentions
If a judge can’t easily tell which kind of ownership you intended, they must make certain assumptions, depending on the fact involved. You might not like those assumptions. For example, if you added your eldest son on title to your house, and didn’t ask him for any money for it, a judge would have to start with the assumption that you meant your son to hold that property in trust, unless you could show that the transfer was meant to be a true joint tenancy. It would be deemed a joint tenancy in name only, not a true joint tenancy.
A court can look at a number of things when it is considering whether you have a true joint tenancy:
- do the four unities exist?
- what evidence is there that a true joint tenancy was intended – is there documentation? Did you behave as though it was a true joint tenancy?
- did you and the other owners pay equally for the asset?
- what do your ownership papers say (and did you really read all of that fine print on the pile of papers you signed at the bank when you opened the account)?
- who controls and uses the asset?
- was a power of attorney involved? If so, why?
In the end, intentions matter. Documentation provides the evidence for those intentions. Missing, or bad, documentation can sabotage your plans. If you are thinking about adding an adult child or other family member on title to an asset with you, contact us to work through some of these complex issues.
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