Many of our readers will be aware that on an application for dependant’s support under Part V of Ontario’s Succession Law Reform Act, certain property that may not be considered an asset of the deceased’s estate can be “clawed back” into the estate for the purposes of considering and funding an award of dependant’s support.  Subsection 72(1)(d) provides that “a disposition of property made by a deceased whereby property is held at the date of his or her death by the deceased and another as joint tenants” shall be deemed to be part of the estate.

Whether jointly-held property is caught by s.72(1)(d) depends on whether there was a “disposition” into that joint tenancy.  When a property is initially purchased by a deceased person and another in joint tenancy and remains as such at the time of death, it can not be said that there was a disposition into joint tenancy: s. 72(1)(d) would not appear to apply.

However, when the ownership arrangement of a property is more intricate, whether or not jointly-held property will be deemed to be an asset of the estate within the context of a dependant’s support application becomes less clear.

Consider the following scenario:

  • At first instance, title to a property is taken as follows:
    • 50% held solely by A; and
    • 50% held jointly by A and B, who are common law spouses.
  • Years later, A conveys the 50% held by her alone to herself and her common law spouse jointly.
  • Therefore, immediately preceding A’s death, 100% of the property is held in joint tenancy by A and B.

Now, after A’s death, A’s minor children assert a dependant’s support claim. Does section 72(1)(d) apply, such that the property can be made available to fund a payment of dependant’s support?

The decision in Modopoulos v Breen Estate, [1996] O.J. No. 2738 interpreted section 72(1)(d) of the Succession Law Reform Act to mean that, only if the property was owned solely by the deceased and later transferred into joint tenancy prior to death, would there be a “disposition” into joint tenancy.

In the unique set of circumstances described above, it could be argued that A never solely owned the property and, therefore, the later disposition is not captured by section 72(1)(d).  However, another perspective is that the 50% interest held initially by A as a tenant in common (with A and B jointly as to the other 50%) would have formed part of her estate if the subsequent disposition to B as a joint tenant did not take place. This interpretation strongly supports that section 72(1)(d) of the Succession Law Reform Act would in fact apply to make the 50% interest in the property available in satisfaction of a dependant’s support claim.  Certainly such an argument is consistent with the remedial intent of the legislation.

To our knowledge, there has yet to be a decision in Ontario that addresses whether section 72 would apply to a disposition out of a tenancy in common and into a joint tenancy, such as that featured in our hypothetical example.  It will be interesting to see how a court would interpret similar transactions if encountered in the future.

Thank you for reading.

David Morgan Smith and Nick Esterbauer

 

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