Using joint tenancy as an estate planning tool in order to minimize probate fees can be a risky course of action, as determined by the Ontario Superior Court of Justice in the recent case of Jackson v Rosenberg, 2023 ONSC 4403. 

In this case Mr. Jackson brought an application seeking a declaration that Ms. Rosenberg, his deceased partner’s niece, held title to his home in resulting trust for him, while he held a 100% beneficial interest in the property. Rosenberg then brought an application in which she sought a declaration that she was the beneficial owner, and requested various ancillary relief. The court opined on the question of whether Jackson had transferred title in his home from himself as sole owner to Rosenberg and himself as joint tenants for no consideration thus creating a resulting trust in his favour, or whether the transfer was intended as a gift to Rosenberg.

Jackson took the position that by adding Rosenberg on title he meant that she would have title to the home upon his death without having to pay probate fees which would be owed if she were given the house through his will, but that she would not receive any rights before then. Jackson recounted an instance where Rosenberg and her husband came to visit him, during which Rosenberg’s husband told Jackson that they would be fixing up the property so it could be sold, with the proceeds of the sale being used to purchase a two-story property on a golf course where the three of them could live together. The idea of his house being sold out from under him panicked Jackson who then requested that a real estate lawyer sever the joint tenancy and convert it to a tenancy in common so that if he died before he regained ownership of his home, Ms. Rosenberg would not get the entire home.

The Court found that his intention at the time of the transfer was to give the right of survivorship to Rosenberg, and that his equity in the property would pass upon his death to her, but that the property was not a gift to her during his lifetime, as he intended to retain control of the property throughout his life. As such, it was his intention that her beneficial interest would arise only upon his death, and that she would hold her legal interest in trust for him during his lifetime. As such the presumption of resulting trust was partially rebutted, since it was Jackson’s intention that Rosenberg would be holding the property for her own eventual benefit, and not as a trustee of his estate. The Court determined that he could not revoke the gift of survivorship however, but as he retained all remaining rights and interests in the property during his lifetime, he was free to encumber or sell the property as he so wished, including being free to sever the joint tenancy. Rosenberg was found to be a tenant in common, holding her 50% interest in the property on a resulting trust for Jackson during his lifetime. However, the court noted that while Jackson had eliminated Rosenberg’s survivorship rights to his 50% share in the property, he could not revoke the right of survivorship with respect to her 50% share. As such, when he dies his 50% share will pass to his estate, and Rosenberg’s 50% share will pass to her by right of survivorship.

The Court stated that, in its opinion, using joint tenancy is a risky way to minimize probate fees, and that where issues arise from the use of joint tenancy as an estate planning mechanism, the legal fees incurred may well exceed the probate fees that were attempting to be avoided. The Court made an important note when it said that “The fact that Mr. Jackson later regretted gifting the right of survivorship to Ms. Rosenberg does not alter his intention at the time of the transfer. The fact that Mr. Jackson may not have understood that transferring the property to Ms. Rosenberg as a joint tenant might complicate his ability to sell or otherwise encumber the property in the future (a prospective purchaser or mortgagee would require Ms. Rosenberg’s consent) does not alter his intention to gift the remaining equity in the Port Hope property to Ms. Rosenberg after his death.”