This blog has been written by Rahul Sharma, Partner, at Fasken Martineau DuMoulin LLP, Toronto

Joint ownership of property with a right of survivorship is perhaps the most common or popular means by which a couple, for example, owns a home in Ontario.  Simply put, “joint with right of survivorship” means that when one of the two joint owners dies, the other becomes the owner of the property.  The succession of the property falls outside of the deceased joint owner’s estate.  In Ontario, this may provide an advantage, as it means that there is no Ontario estate administration tax payable in respect of the succession of the property from one joint owner to the other.  At its highest rate, Ontario estate administration tax (also often generally or colloquially referred to as “probate fees” or “probate tax”) is 1.5% of asset or property value.

But what about in the context of parents and children?  We continue to field many questions—including from professionals in the industry—about joint ownership of property as between parents and children.  A simple example is helpful.  A mother has two children.  The mother’s Will provides that, on her death, her estate is to be divided between the two children.  The mother has a bank account that is joint, with right of survivorship, as between herself and one child.  Following the Supreme Court of Canada’s decision in Pecore, the account that is jointly held with one child would be held in resulting trust for the mother’s estate on the mother’s passing.  This is subject to the child who is the joint account holder rebutting the presumption of a resulting trust and establishing that the mother’s intention was to gift the proceeds of the account to her.  In brief, if the joint account was a means of avoiding the payment of probate fees, then it likely will not work as planned.

The same is true for real property ownership.  The recent decision of the Ontario Court of Appeal in Jackson v. Rosenberg has been widely written about, including in the mainstream media.  The case serves as a reminder that joint property ownership may come with perils and problems in certain cases.  Notably, the original intention of joint property ownership in Jackson v. Rosenberg seems to have been the avoidance of probate fees or Ontario estate administration tax.

One of the points of estate planning is to establish a plan that works for you, given your circumstances and your goals.  Estate planning lawyers will always remind clients to review their planning periodically, and definitely when there is a material change in circumstances.  The media presents a multitude of viewpoints on estate planning.  Articles are often well written, and they seem to come up in my news feeds quite a bit, especially around personal tax filing time.  But everything that you read, hear and see needs to be applied to your own context and circumstances.  The fact that we continue to see many cases and conflicts concerning joint property ownership in Ontario is suggestive of the fact that people are either misinformed, misguided or their plans are misaligned with today’s legal realities.

This does not mean that Ontario estate administration tax always needs to be paid.  Although there is a saying that the “probate tail should not always wag the dog”, Ontario estate administration tax can be saved or avoided through properly structured and considered planning.  Such planning could include joint property ownership—but once again, it all depends on your facts and circumstances.  So, if you are reading this blog post and wondering about your own estate planning and the joint ownership of property as part of your planning (or if the topic comes up at a summer BBQ), then my simple request and take-home message to you is that you please contact a lawyer with experience in estates and trust law.  I encourage everyone to please work with your lawyer and your other advisers (such as financial planners and accountants) to establish the right plan for you and your family.

Enjoy the summer!