All About Estates

Joint Tenancy and Right of Survivorship

There has been much case law surrounding the difficulties that may arise when a parent and adult child are joint tenants with respect to real property. In the Ontario Court of Appeal (the “Court”) decision, Jansen v. Niels Estate[1], the Court was faced with the issue of whether Theadora Niels’ (“T”) interest in her house passed by right of survivorship to her daughter-in-law, Ingrid Niels (“I”), pursuant to a joint tenancy established by gift, or became part of her estate that was to be shared among her children.

T made a Will that divided her estate among her three children. T’s daughter, Marjolein Jansen (“M”) did not have a good relationship with one of her brother’s, Richard Niels (“R”), or with T.  When M noticed a “for sale” sign on T’s property, M wrote a provocative letter to her mother asserting that her mother had always said that the house belonged to M and her brothers following T’s death.  T did not respond to the letter.  T subsequently changed her Will to remove M as an executor, but continued to leave her a one-third share of her estate.

T purchased a new house in her name alone and a few months later she transferred title to herself and her son, R, as joint tenants. A few years later they transferred title to T, R and R’s wife, I, as joint tenants.

Subsequently, R and I signed a separation agreement that R prepared from a form he obtained on the Internet. The agreement, which was made without legal advice, provided that R would transfer his interest in the property to I following T’s death.

After T was diagnosed with cancer she called her lawyer’s legal assistant, seeking assurance that the property would go to R and I on her death. She was assured of this.

After T’s death, R transferred his interest in the property to I. M brought an application seeking a declaration that the property formed part of T’s estate.

The application judge found that although T did not say specifically that she was gifting the property, T clearly intended to do so and completed her gift in accordance with the requirements set out in McNamee v. McNamee[2] and summarized in Foley v. McIntyre[3] (i.e., an intention to donate, sufficient delivery of the gift, and acceptance of the gift).  The gift was fully and freely informed and the presumption of undue influence was rebutted.[4]  T was cognitively engaged and did what she wanted.  Consequently, the presumption of resulting trust was rebutted.

Further, T acted with legal advice in creating the joint tenancy, first with R and then with R and I. She understood the difference between joint tenancy and tenancy in common and there was no evidence to suggest that the parties intended to mutually treat the tenancy as constituting a tenancy in common.  In addition, the separation agreement did not evidence a course of conduct to sever the joint tenancy.

On appeal, the Court looked at whether the application judge erred in concluding (1) that the joint tenancy had not been severed, (2) that T gifted the property to R and I, and (3) that T was not subject to undue influence.

Severance of a joint tenancy may be achieved in one of three ways, known as the “three rules”:[5]

  1. Unilaterally acting on one’s own share, such as selling or encumbering it;
  2. A mutual agreement between the co-owners to sever the joint tenancy; and
  3. Any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

Relying on Rules 1 and 3, M submitted that the joint tenancy was severed by the separation agreement, pursuant to which R agreed to transfer his interest in the property to I on T’s death.

The Court rejected this argument. First, as to Rule 1, the separation agreement, assuming it was valid, did no more than express an intention to convey R’s interest in the property in the future. It is not clear that an expression of future intent is sufficient to achieve severance.[6] Second, as to Rule 3, the conveyance of one joint tenant’s interest to another severs only the interest of the joint tenant making the conveyance. In this case, since there were three joint owners, it would not have severed the whole joint tenancy. Therefore, no part of the property would become part of T’s estate.

Further, the Court rejected M’s submissions that the application judge erred in concluding that T gifted the property to R and I. The Court found that the application judge applied the proper test for a gift. T’s intention to gift the property was evident from her instructions to her lawyer and her lawyer’s assistant, and the executed documents. This included[7]:

  • Her advice to her lawyer that she would take title alone and add R to the deed later;
  • The codicil to her Will, making it clear that the home would not form part of her estate;
  • Her request that the joint tenancy between herself and R be created on his return to Canada;
  • The absence of any request to revert the title to tenancy in common; and
  • Her call to her lawyer’s assistant seeking assurance that her home would pass to R and I on her death.

Finally, the Court also agreed with the application judge that the presumption of undue influence was rebutted. The presumption of undue influence applies “where the potential for domination inheres in the relationship between the transferor and transferee”[8]. Where the presumption applies, the transferee must establish that a gift was the result of the full, free and informed thought of the transferor. The application judge emphasized T’s independence. Her advanced age was not a trigger for domination. T was merely pursuing an intention to gift the property that she developed years prior and never wavered from.

This decision is another case displaying the difficulties that may arise when a parent and adult child are joint tenants with respect to real property. Nevertheless, where the intention of the parent is clear, as it was in this case, a true joint tenancy may exist.

 

[1] Jansen v. Niels Estate, 2017 ONCA 312.

[2] McNamee v. McNamee, 2011 ONCA 533.

[3] Foley v. McIntyre, 2015 ONCA 382.

[4] Supra note 1 at para 19.

[5] Hansen Estate v. Hansen, 2012 ONCA 112.

[6] Supra note 1 at para 26.

[7] Supra note 1 at para 41.

[8] Supra note 3 at para 28.

About Brittany Sud
Brittany Sud is a member of the Trust, Wills, Estates and Charities Group at Fasken, Toronto office. Brittany is developing a broad estates and trusts practice with a focus on planning and administration matters. As part of her practice, Brittany assists high net worth clients, entrepreneurs and professionals with Wills, powers of attorney, domestic contracts and trusts. She has experience developing and implementing cohesive estate plans that reflect the financial objectives and short and long-term goals of clients, including advising on probate planning, family business succession planning, asset protection strategies and disability planning. Brittany’s estate administration practice includes preparing applications for probate and administering the Canadian estates of non-residents. Outside of the office, Brittany enjoys playing softball and tennis, travelling and cooking. She is a dedicated volunteer of the United Jewish Appeal, Jewish National Fund, One Family Fund and Baycrest Foundation. Community Involvement • Host, Baycrest Foundation - Game Night for Baycrest, 2015 • Chair, Pitch for Israel Softball Tournament, 2014-2016 • Vice-Chair, United Jewish Appeal Young Lawyers Leadership Campaign Canvassing Team, 2016 Memberships and Affiliations • Member, Canadian Bar Association • Member, Ontario Bar Association - Trusts and Estates Law Section • Member, Ontario Bar Association - Young Lawyers’ Division • Student Member, Society of Trusts and Estates Practitioners (STEP) Canada

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