Is Joint Tenancy A Worthy Tool To Avoid Probate?

Everyone knows a casual estate expert that idealizes joint tenancy. Home, cottage, maybe a farm. The argument is if you die with real estate, probate is required to assign new title while with joint tenancy there is no such requirement and resultingly no cost. The question that must be addresses is the old one. “Is this penny wise and pound foolish?”

The pennies are not inconsequential

In Ontario, the Estate Administration Tax (EAT) is 1.5% of probated assets exceeding $50,000. With real estate at today’s extraordinary levels, the number resulting can be meaningful. On an $800,000 building $12,000. Add to that some legal fees and disbursements.

Transferring the title so children become joint tenants would avoid the costs and would be inexpensive to do. So, the problem is solved! As Nike and the pseudo-experts would say, “Just do it” Cheaper is better, right?

But.  There is always a but.

Upon further consideration

There are always more variables.

  1. Would there (could there) be income tax consequences. If you sell an interest in your cottage to a third party there will be. Are you certain there will be none with the children?
  2. What if a child who is on title faces bankruptcy or a judgement. Could creditors attach their ownership interest?
  3. What Family Law Act issues arise in case of separation or divorce
  4. What if parents want to sell but the children do not? All of them will be required to sign the deed.
  5. Are there trust issues that might be hard to resolve later?

The trust issues

Justin DeVries, a true estate expert, published an interesting piece relating to an estate involving a mother, her only daughter and a transfer of a property to joint tenancy.

Of Love, Resulting Trusts, Matrimonial Homes and Fenelon Falls

In this case, the daughter died before the mother. Apparently no problem. The mother established a new joint tenancy with daughter’s husband and the couple’s two children. Her will showed a bequest equally to the three of them too.

But father decided he should have 2/3 of the house, not the one third mother-in-law allocated to him. His argument was based on the interest his deceased wife would have had, had she lived and how there was some trust for him involved. The estate and the two children objected. and he pursued the action in the courts. The courts agreed with the estate and the children.

The law is clear on deceased wife’s interest and there was little for him to hold to.

The Takeaway

Justin makes a good point.

“Careful estate planning with the requisite professionals is always a must (the world is only getting more complicated and fraught, not less). Family conversations about the consequences of such planning and the intention of the person doing the planning are also a must. Hiding your head in the sand or hoping the next generation will work it out only condemns those that follow to an endless and tiring round of uncertainty, tension and litigation. Be smart, plan smart.”

Other considerations might have been, 1) what are the legal costs to bring and defend such actions. Maybe more importantly, 2) what affect does such litigation have on continuing family relationships. I can’t help but think the children found this distressing.

As Justin emphasizes, “Be smart. Plan smart”.   And consider all the variables. Tax driven plans often fail.

As my late friend Moe has said, “I can’t afford anything that cheap.”


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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