Recent court rulings in Canada have illuminated the intricate legal and practical dynamics of joint tenancy, a widely adopted estate planning tool designed to facilitate the seamless transfer of property ownership through the right of survivorship. While joint tenancy is often praised for its simplicity and effectiveness in bypassing probate, these cases underscore its potential risks, particularly when circumstances change, or disputes arise. The rulings emphasize the importance of understanding the flexibility and limitations of joint tenancy arrangements, especially in estate planning contexts.
In Jackson v. Rosenberg, the Ontario Court of Appeal affirmed the unilateral right of a joint tenant to sever a joint tenancy, converting it into a tenancy-in-common and thereby extinguishing the right of survivorship. Nigel Jackson had transferred his property title into joint tenancy with Lori Rosenberg, his late partner’s great-niece, in 2012 as part of an estate planning strategy. The arrangement was intended to allow Rosenberg to inherit the property without incurring probate fees. However, in 2020, Jackson learned that Rosenberg and her spouse intended to renovate and sell the property while he was still alive. Concerned about retaining control over his home, Jackson severed the joint tenancy, ensuring that he maintained individual ownership of his share.
Rosenberg argued that the property transfer constituted an irrevocable gift, granting her beneficial ownership of the property. However, the court disagreed, applying the presumption of resulting trust, which placed the burden on Rosenberg to prove that the transfer was an unconditional gift. The court concluded that Jackson had only gifted her a contingent right of survivorship, meaning she had no exercisable rights during his lifetime. By severing the joint tenancy, Jackson effectively reduced Rosenberg’s interest to a 50% share of the property’s equity upon his death. This ruling clarified that gifting the right of survivorship does not prevent a donor from taking actions—such as severance—that diminish its value. The court’s decision underscores the flexibility inherent in joint tenancy agreements but also highlights the potential for disputes when expectations between co-owners diverge.
In contrast, the British Columbia Supreme Court addressed a different aspect of joint tenancy in a dispute involving a Burnaby property. The property, jointly owned by a grandmother and her granddaughter since 2008, was explicitly transferred with the right of survivorship, as confirmed by a 2010 deed of gift. After the grandmother was declared incompetent in 2019, her adopted son, acting as her committee under the Patients Property Act, severed the joint tenancy in 2021. He claimed the action was necessary to align with the grandmother’s purported intention to distribute her estate equally among all her grandchildren. However, the court found no evidence to support the claim that the grandmother intended to revoke the joint tenancy or alter her estate plan after the gift was made.
The court invalidated the severance, determining that it primarily sought to change the inheritance distribution rather than benefit the grandmother or her estate during her lifetime. Additionally, the court ruled that a document purporting to impose conditions on the 2008 gift was invalid, as it had been signed under undue influence. Ultimately, the court affirmed the granddaughter’s sole legal and beneficial ownership of the property. This decision highlights the importance of respecting the donor’s original intentions in joint tenancy agreements and the limitations on actions taken by committees acting on behalf of incapacitated individuals.
These cases collectively illustrate the dual nature of joint tenancy: while it offers a streamlined mechanism for avoiding probate, it also carries inherent risks due to its flexibility. For estate planning, the implications are significant. The ability to sever a joint tenancy provides property owners with autonomy to adapt to changing circumstances, but it also introduces uncertainty for co-owners who may expect the right of survivorship to remain intact. Moreover, actions taken by third parties, such as committees, to alter ownership arrangements can lead to legal challenges if they deviate from the donor’s documented intentions.
To mitigate these risks, individuals considering joint tenancy should take proactive steps to ensure their estate plans are clearly documented, regularly reviewed, and aligned with their long-term goals. Open communication with co-owners can help prevent misunderstandings and disputes, while legal advice is essential to navigate the complexities of property law. An estate planning attorney can provide guidance on the benefits and limitations of joint tenancy compared to other ownership structures, helping clients choose the arrangement that best suits their needs.
These rulings serve as a reminder that joint tenancy, while a powerful estate planning tool, requires careful consideration and foresight. The ability to sever a joint tenancy underscores the need to balance flexibility with stability in ownership arrangements, ensuring that the chosen structure can adapt to evolving circumstances without undermining the original intent. As legal and personal circumstances change, ongoing attention to property arrangements is crucial to avoiding disputes and preserving the integrity of estate plans. These court decisions reaffirm the importance of informed decision-making and highlight the dynamic nature of property ownership in the modern legal landscape.
Contact us for more information.
Published on February 10, 2025