Tag: joint ownership
Competing applications about the ownership of a home were before the Court in Marley v. Salga, 2019 ONSC 3527. On the death, the home was jointly owned between the deceased (Salga) and his wife (Marley). Notwithstanding the registered, legal ownership of the property, Salga’s Will gave Marley a lifetime right to occupy and use Salga’s one-half interest in the property and thereafter directed that the house be sold for the benefit of the residuary beneficiaries.
This led the residuary beneficiaries to commence an Application for a declaration that the Estate is entitled to an undivided one-half interest in the home and for an order requiring the Estate Trustee (Klassen) to sell the home right away (the “Salga Application“). Thereafter, Marley commenced her own Application for a declaration that she was the sole legal and beneficial owner of the property, or, alternatively, that her interest in the property is greater than 50% (the “Marley Application“).
Ultimately, Justice Reid found that ownership of the property was severed by the deceased in the course of his dealings but denied the Salga Applicants’ request that the property be sold before the termination of Marley’s interest under the Will. The Marley Application was also denied. Our blog on this decision can be found here.
The parties were unable to agree to the issue of costs. Justice Reid, 2019 ONSC 6050, followed the traditional approach to costs in estate matters and the costs of both applications, on a partial indemnity scale, were ordered from the Estate. In reaching this conclusion, Justice Reid considered and found the following:
- The Marley Application was in essence a response to the Salga Application and the costs of both proceedings were treated as one;
- Both parties were found to be partially successful: the Salga Applicants were successful in obtaining a declaration that 50% of the home belongs to the Estate and the Marley Applicant was successful in preventing an immediate sale of the home;
- Consideration was given to the fact that an award of costs from the Estate meant that the Salga Applicants (as the residuary beneficiaries) would be effectively bearing their own costs as well as Marley’s costs. However, that was not enough to outweigh the deceased’s responsibility to act unambiguously by severing his interest on title during his lifetime.
- Costs against the Estate in this case “places the responsibility for the litigation squarely on [the deceased] where it belongs“.
This costs decision is also an informative read for the costs of an estate trustee as a respondent in both proceedings and how costs should be paid from an estate where there is no liquidity.
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It is often said that an Attorney for Property can do anything on behalf of the grantor’s behalf except make a will. This is on account of section 7(2) of the Substitute Decisions Act (the “SDA“), which provides:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” [emphasis added]
Although at first glance it would appear that the potential tasks that an Attorney for Property could complete on behalf of a grantor are almost absolute, with the Attorney for Property being able to do anything on behalf of the grantor except sign a new will, in reality the tasks that an Attorney for Property may complete relative to the grantor’s estate planning is more restrictive than this would suggest at first glance. This is because the definition of “will” in the SDA is defined as being the same as that contained in the Succession Law Reform Act (the “SLRA“), with the SLRA in turn defining “will” as including not only typical testamentary documents such as a Last Will and Testament or Codicil, but also “any other testamentary disposition“. As a result, the stipulation that an Attorney for Property can do anything on behalf of the grantor “except make a will” would include not only a restriction on the Attorney for Property’s ability to sign a new Last Will and Testament or Codicil on behalf of the grantor, but also a restriction on the Attorney for Property’s ability to make “any other testamentary disposition” on behalf of the grantor.
It is fairly common for individuals such as spouses to own real property as joint-tenants with the right of survivorship. When one joint-owner dies ownership of the property automatically passes to the surviving joint-owner by right of survivorship, with no portion of the property forming part of the deceased joint-owner’s estate. Although such an ownership structure may make sense when the property is originally purchased, it is not uncommon for circumstances to arise after the property was registered (i.e. a divorce or separation) which may make one of the joint-owners no longer want the property to carry the right of survivorship. Should such circumstances arise, one of the joint-owners will often “sever” title to the property so that the property is now held as tenants-in-common without the right of survivorship, making efforts to attempt to ensure that at least 50% of the property would form part of their estate should they predecease the other joint-owner.
Although severing title to a property is fairly straight forward while the owner is still capable, circumstances could become more complicated should the owner become incapable as questions may emerge regarding whether their Attorney for Property has the authority to sever title to the property on behalf of the grantor, or whether such an action is a “testamentary disposition” and therefor barred by section 7(2) of the SDA.
The issue of whether an Attorney for Property severing title to a property is a “testamentary disposition” was in part dealt with by the Ontario Court of Appeal in Champion v. Guibord, 2007 ONCA 161, where the court states:
“The appellants argue that the severing of the joint tenancies here constituted a change in testamentary designation or disposition and is therefore prohibited by s. 31(1) of the Substitute Decisions Act because it is the making of a will.
While we are inclined to the view that the severance of a joint tenancy is not a testamentary disposition, we need not decide that question in this case. Even if it were, we see no error in the disposition made by the application judge, because of s. 35.1(3)(a) of the Substitute Decisions Act.” [emphasis added]
Although the Court of Appeal does not conclusively settle the issue in Champion v. Guibord, the court appears to strongly suggest that they are of the position that an Attorney for Property severing a joint-tenancy is not a “testamentary disposition” within the confines of the SDA.
Thank you for reading.
The holiday season is upon us, and with it comes family gatherings, buying and wrapping gifts, and travel. Suffice to say, it can be a hectic and busy time. Nonetheless, with 2018 on the horizon, many of us take the time to reflect and set resolutions for the upcoming year. Despite this, so many Canadians do not have a Will.
Why not? Estate planning need not be trying, and the holiday season is a perfect time to start considering your estate plan.
With this in mind, I thought I would highlight an article from the Globe and Mail which does a great job of highlighting issues to get you thinking about your estate plan:
- Get started – make a detailed list of your assets, liabilities, and joint assets, and think about your family’s needs and lifestyle.
- Consider your options – do you want your bequests to be absolute, subject to the terms of a trust, or gifted during your lifetime?
- Appoint representatives – think about who you trust to administer your estate and ensure that they are up for the job.
- Special circumstances – are there any beneficiaries who have special circumstances such as those receiving ODSP, that would benefit from specific trusts?
- Taxation – meet with a professional to understand tax consequences and the vehicles available to limit the payment of taxes, including the use of joint ownership and estate freezes.
- Cottages – should your estate involve the cherished family cottage, think about whether you want it sold, or shared amongst family members. If the latter, think about preparing a co-ownership agreement.
Wishing all of our readers a happy New Year!
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Many people are aware of the presumption which was confirmed by the Supreme Court of Canada in Pecore v. Pecore that assets which are held jointly between the deceased and certain individuals (including their adult children) are presumed to be held by the surviving joint owner on a resulting trust for the deceased owner’s estate unless they can rebut the presumption and show evidence that the deceased intended them to receive the property by right of survivorship. While the application of such a presumption is clear when the property is owned jointly between a parent and an adult child, what about when the property is owned jointly between two married spouses? Does a similar presumption to that in Pecore apply, such that the surviving spouse is forced to show that the deceased spouse intended them to receive the asset upon their death, failing which it is presumed to form part of the deceased spouse’s estate?
The common law presumption that joint assets are held on a resulting trust for the benefit of the deceased owner’s estate has been altered in Ontario as it relates to married spouses by the Family Law Act. Section 14 of the Family Law Act provides:
“The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not marries, except that,
(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and
(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).”
As a result of section 14 of the Family Law Act, property which is held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship. That being said, it is a rebuttable presumption, such that if there is evidence that the deceased spouse did not intend the property to pass to the surviving spouse upon death, the deceased spouse’s estate could seek a declaration that the asset in question is held on a resulting trust for the benefit of the deceased spouse’s estate. Section 14 of the Family Law Act effectively reverses the presumption as described in Pecore in the case of married spouses, whereby property held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship unless there is evidence to the contrary such that the presumption can be rebutted.
Notably, section 14 of the Family Law Act only reverses the presumption as it relates to married spouses. As a result, an argument could be raised that in circumstances where common law spouses own property jointly, that the standard presumption as confirmed by Pecore would apply, such that the surviving common law spouse is presumed to hold the asset on a resulting trust for the benefit of the deceased spouse’s estate unless they can show evidence to rebut the presumption.
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Isn’t estate planning just for old, married, and rich people? This is a question that we face all of the time. The simple answer is – no.
Proper estate planning helps not only the old, but the young as well.
A recent US survey amongst 23 to 35 and 35 to 44 year olds indicates that, respectively, 80% and 67% of these groups do not have a Will. Closer to home, the percentages are quite similar. A Canadian survey found that 77.2% of 25 to 34 year olds and 67.9% of 35 to 44 year olds do not have a Will. A prior Hull & Hull blog highlights those Canadians that had a Will that needed updating.
Given that the leading cause of death amongst millennials is accidental and unintentional injuries, estate planning should not wait.
A recent article on Forbes highlights estate planning tips that every millennial should consider regardless of whether they are married, have dependants, or are still paying off student loans. Of course, professional advice should always be sought.
- Add beneficiaries to your accounts – designating beneficiaries on bank accounts and investments allows for the transfer of the asset to your intended recipient upon your passing. Including the recipient as a beneficiary, as opposed to a ‘joint owner’, ensures that they do not have access to the account (and funds), while alive leading to concerns of misappropriation. The Forbes author additionally suggests that these designations should be checked at least once a year in the event they need to be updated.
- Get a basic Will – nothing overly detailed or expensive is required. Carefully thinking through the choice of estate trustee(s) and the division of assets will not only ensure your wishes are followed, but will avoid the headache of proceeding with the administration of an intestate estate. The Forbes author additionally suggests having a secured list of your digital assets, along with the username and password.
- Consider life insurance to cover student loans – certain loans are not discharged upon death. Insurance helps alleviate the concern that a co-signatory, usually a parent, is not left with the burden of paying off the remainder of the loan.
A recent decision of the Ontario Superior Court of Justice, Post Estate (Trustee of) v Hamilton, 2015 ONSC 5252 (available on Westlaw) considered a rather unusual set of facts with respect to joint tenancy and an interesting application of the equitable remedy of adverse possession.
Edward and Heather had been common law spouses several decades ago. They purchased a home together (the “home”) in 1980, as joint tenants. Three years later, Edward and Heather ended their relationship, and Heather moved out of the home they had bought together. Edward lived in the home ever since, until his death in December 2014. Heather has not been heard from since 1983.
When Edward died last year, his Estate ran into a roadblock with the home. Edward’s family had understood that the home was in Edward’s name alone, but were surprised to find that Heather and Edward still owned the home together as joint tenants. Under the law of joint tenancy, when one of the joint owners dies, the asset passes to the surviving joint tenant, by right of survivorship. Theoretically, therefore, the home should have become Heather’s property.
The wrinkle in this case was that, despite “strenuous efforts”, Heather could not be found. Edward’s Estate Trustee then brought an Application for an Order vesting title in the home in the Estate. The issue considered by the Honourable Justice MacDougall was thus, whether one joint tenant can acquire full title to property by way of adverse possession. In order to establish title by possession, Justice MacDougall stated that a party must show three things:
- i. Actual possession for the statutory period by him/herself and those through whom s/he claims;
- ii. That such possession was with the intention of excluding from possession the owner or person entitled to possession; and
- iii. Discontinuance of possession for the statutory period by the owners and all others, if any, entitled to possession.
With respect to the first and third requirements, Edward had actual possession of the home by himself for 32 years, which is well beyond the 10 year statutory period required. With respect to the second requirement, the court found that, although Edward did not have a “clear and direct intention” to exclude Heather, the court can still infer a presumed intention to exclude and consequently find in favour of adverse possession. In this case, Justice MacDougall was able to infer such presumed intention due to the facts that Edward believed he had full ownership of the house, he paid all the expenses for the house for 32 years, and made mortgage payments and renewed the mortgage without Heather’s signature or agreement.
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In Re Nesbitt Estates, an unreported 2005 decision of the Ontario Superior Court of Justice that is presently under appeal, the actions of an attorney under power of attorney were scrutinized by the Court in an unusual fact situation.
In this case, the attorney managed the property of his elderly aunt and uncle at their request and made a series of transfers of the aunt’s bank accounts into joint bank accounts held with her husband. The evidence suggested that the aunt was capable at all relevant times although there was admittedly sketchy evidence as to whether the aunt knew and approved of each and every transaction that placed her assets into joint ownership with her husband of sixty years. What was clear was that her testamentary intention throughout the period of the transfers was to benefit her husband with her entire estate. The wrinkle was that the aunt inexplicably changed her will shortly before her death to benefit, not her husband but, rather, a family friend.