The Gift of An Irrevocable Right of Survivorship: What Everyone Wants Under the Tree

December 1, 2017 Hull & Hull LLP Estate & Trust, Estate Planning, Hull on Estates, Joint Accounts, Trustees, Uncategorized, Wills 0 Comments

“When a parent gives an adult child a joint interest in real property during his or her lifetime, can that gift include an irrevocable right of survivorship that has the effect of preventing the parent from later severing the joint tenancy?”

That was the question that was asked and answered in Pohl v. Midtal, 2017 ABQB 711 (CanLII).

Boiled down, the fact pattern raised in that case is quite common: parents transfer real property into joint tenancy with a child. Later, the relationship sours, and the parents want their property back.

In a prior decision, the parents relied on the Supreme Court of Canada decision of Pecore v. Pecore, and alleged that the property was held in trust for them. The court disagreed, finding that the presumption of resulting trust was rebutted on the evidence, and that a gift was intended.

Subsequently, the parents purported to sever the joint tenancy. The child objected, and commenced a claim for a declaration that the parents were not entitled to exercise their right to sever the joint tenancy.

The court concluded that in the circumstances, the gift of the joint tenancy included an irrevocable right of survivorship. While typically a joint tenant has the right to sever the joint tenancy, in making the transfer the grantor can gift an irrevocable right of survivorship.  The court will review the evidence in order to determine the intention of the grantors at the time of the gift.

In determining that the transfer of joint tenancy included an irrevocable right of survivorship, the court noted that the parents, at the time of the transfer, clearly intended that the child would get the real property upon their deaths. In support of this, the court referred to the fact that on the same day as the transfer, one of the parents made a will that did not provide for the recipient (as she was to receive the jointly held property).  Later, the other parent made a similar will that did not provide for the child, and stated in his will that “I have provided for [her] during my lifetime.”

The question is not without uncertainty, as there is competing case law to the effect that notwithstanding a gift of joint tenancy, both the grantor and the recipient maintain the right to convert the joint tenancy into a tenancy in common.

Have a great weekend.
Paul Trudelle

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