Gratuitous Transfers Into Joint Tenancy And The Gift Of The Right Of Survivorship: Part I

• Published date: 08 March 2023
• Subject Matter: Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
• Law Firm: Miller Thomson LLP
• Author: Ms Lauren Hamilton and Gail Black

Gratuitous transfers into joint tenancy

Parents often wish to transfer their real property into joint tenancy with their adult child, or add their child as a co-owner of their bank accounts. The parents may have a number of reasons for taking such steps: to avoid probate fees, to avoid having to go through probate entirely, for convenience to allow the donee to access funds easily for the benefit of the donor, because they want that child to be a full owner of that asset with them immediately, or because they want that child to be the full owner of the asset on the death of the parent. However, the legal implications and potential consequences of gratuitously adding someone to a real estate title or to a bank account can be serious, and often what is intended to simplify a matter results in litigation after the original owner dies.¹

In this two-part series, we will be discussing some of the implications of gratuitously transferring property into joint tenancy and why it is important to document what the intentions are when such a transfer is made. In this first part of the series, we will focus on what forms of ownership interests can arise from a gratuitous transfer into joint tenancy with a focus on the gift of the right of survivorship. The second part of the series will focus on the gift of the right of survivorship with respect to real property.²

What ownership interests can arise?

From a legal perspective, when property is gratuitously transferred into joint tenancy, there are three possible ownership scenarios that can arise:

1. true joint tenancy with full rights of ownership as a joint owner beneficially;
2. a resulting trust where on the donor's death the property is held on trust for the donor's estate; or
3. the gift of the right of survivorship where the donee is fully entitled to what remains on the donor's death.³

When considering whether to add someone gratuitously to title or to a bank account, it is important to understand that a dispute can arise as to which one of these three ownership scenarios exists and what rights or restrictions go along with each ownership interest.

True joint tenancy

The concept of joint tenancy was outlined by Justice Khullar in the Alberta Court of Queen's Bench decision, Pohl v Midtal⁴:

1. joint tenancy requires that the four unities exist: interest title, possession and time;
2. the right to use the property belongs to each joint tenant and
3. the right of survivorship exists between joint tenants.⁵

When property is...