More on Joint Tenancy

2008/09/18 Originally published in the Vernon Morning Star.

Joint tenancy ownership is the most common type of freehold ownership. The principle difference between joint tenancy and tenants in Common is the right of survivorship. In joint tenancy if one of the owners dies, the title automatically passes to the surviving owner(s). A death certificate needs to be filed but the property does not have to go through the probate process to become fully owned by the surviving owner(s).

However, there were two court cases in 2007 that put a twist on joint tenancy. Sometimes, the adult child or children have been added to the title as joint tenancy owners, usually to avoid probate fees. Since those two court cases, the law presumes that the adult child is only holding the property "in trust" for the parent and that when the parent passes on, the property gets returned to the parent's estate. This result is exactly the opposite of what the parent and child planned for under previous legal practice.

If this type of joint tenancy isn't handled with certain properly prepared paperwork such as a "Deed of Gift", you could find yourself embroiled in expensive litigation. Joint bank accounts held with adult children are also clearly involved in these recent law changes.

Now the adult child is in the position of having to provide evidence that the asset was intended to belong to the child upon the parents' death. It's my understanding that there could even be implications of Capital Gains taxes on the surviving adult child.

There are other instances that could prove concerning, such as a joint tenancy ownership with a friend.

In cases of typical joint tenancies between long married spouses and/or when both parties to the ownership have made substantial contributions, disputes are very rare.

To my readers: Please remember, I am a realtor not a lawyer. I came across this information in one of the many law bulletins I receive. I urge you to consult an estate lawyer if you can see there is any chance this change in the law could even possibly affect you.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.

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