Joint Title

Any assets owned jointly by the deceased and another, are presumed to automatically pass to the surviving joint owner outside the will and are, therefore, not affected by the terms of the will. This may avoid delays in the disbursement of the estate and can reduce or eliminate probate fees. (Probate fees are avoided where an asset does not pass through the estate).

Joint ownership is a popular way of avoiding probate, but care must be taken with whom you make a joint owner. For example, a problem may arise when a widow makes one of her children a joint owner of her home, so that this asset will pass to the child outside of the estate. The problem here, is that upon the mother’s death, the child that is joint owner has no obligation to pay the other children their share of their mother’s home. The child with the joint ownership is now the sole owner and the home hasn’t formed part of the estate so that the will can give direction. This can lead to family strife and conflict. Great care and thought must be given when naming joint owners other than a spouse. It is highly recommended to talk to a lawyer in regard to this issue.

The provisions of spousal agreements that can affect the division of assets should be kept in mind when determining the benefits and risks of joint assets. In particular, where one has entered into an agreement upon remarriage (or entering into a common-law relationship) that effectively allows the person to leave their assets to children from a previous relationship. Even where a will is prepared to give effect to such an agreement, if one then proceeds to make all or many of these assets joint with the second spouse the planning done in the agreement and will are effectively defeated by the right of survivorship attached to joint ownership.

There are other issues that may arise in joint ownership including:

The loss of sole control over one’s assets.
Potential tax implications involved in transferring a solely owned asset to joint ownership with children or other individuals.
The act of transferring an asset is viewed as a disposition by Canada Customs and Revenue Agency and may trigger a capital gain to the donor based upon the fair market value of the asset at the date of transfer. An effort to avoid a rather modest probate charge may have an unwanted and costly result. Speaking with a lawyer is recommended before it is undertaken.