Using Joint Tenancies In Estate Planning
Two Supreme Court of Canada decisions released in the spring of 2007 addressed the issue of using joint tenancies with rights of survivorship.
When there has been a gratuitous transfer, such as when a parent transfers his or her sole ownership of assets into a joint tenancy with a child, and there is a subsequent dispute over whether that parent actually intended to make a gift of the property, the common law presumptions of advancement and resulting trust may apply. The application of the presumptions can be uncertain as the particular facts of the case will determine whether the gift was intended to pass outright or whether the recipient merely held the gift in trust.
In Madsen Estate v. Saylor, 2007 SCC 18, the Supreme Court of Canada applied the presumption of resulting trust to hold that a transfer of a father’s bank account into a joint tenancy with one of his children did not entitle that child to retain the assets in that bank account upon his death. Instead the assets flowed through the father’s estate.
The presumptions of advancement and resulting trust will not be relied upon, however, where the intention of the transferor can be determined at the time that the transfer to the joint tenancy was made. Such was the case in Pecore v. Pecore, 2007 SCC 17.
Consequently, documenting a transferor’s intention at the time of transferring assets into a joint tenancy for estate planning purposes will help to avoid the uncertainty created by the presumptions of advancement and resulting trust.
For more information on related matters, contact Melodie Hope who is part of our Tax Law Group at:
firstname.lastname@example.org or (250) 869-1210