An important characteristic of joint tenancy is the right of survivorship. With this right, when a joint tenant dies, their interest in the property is extinguished, increasing the holdings of the survivors. On the death of the second to last co-owner, the remaining owner will hold the full interest.
Joint tenancy is often used as an estate planning tool for spouses and, more and more, for children.
Survivorship occurs by operation of law and is an alternative to transfer by will. Joint tenancy eliminates the need to seek probate to obtain a change in the registration of title to land (to remove the name of deceased). Joint tenancy may also offer some insulation from creditors as a creditor is generally unable to seize the deceased joint tenant’s interest in the property as the right to do so is lost on their death. Joint tenancy may also avoid the need for probate and probate fees in relation to certain property.
There are two conventional forms of concurrent ownership: joint tenancy and tenancy in common
Creation of a joint tenancy requires four unities:
- unity of interest – the holdings of each joint tenant must be equal in nature, extent and duration
- unity of title – the holdings must arise from the same act or instrument
- unity of possession – their rights must relate to the same piece of property
- unity of time – the interest of the joint tenants must arise at the same time
This area of law can become quite complicated when an asset is owned in joint tenancy (legal interest with no real value) but the joint tenants intend in fact for the asset to be the property of only one of them (beneficial interest which has the real value). For example, take a family which includes mother, father and three children. The parents transfer title to the family home into the names of both parents and their eldest child, but the parents’ true intention is, when both parents have died, for the family home to be equally shared among their all three of their children, not just the eldest child on title. If you are considering this form of estate planning, a professionally advised plan is crucial. Do not rely upon a self-advised plan. Ask you advisor to explain the implications of joint tenancy which apply to your unique situation and obtain advice regarding deeds of gift and bare trust declarations.
While joint tenancy is often used for estate planning, there are some limitations. For example, a parent adding a child as a joint owner is giving up unilateral control over the property during their lifetime and negating their ability to change their mind regarding the disposition of their property upon their death without the consent of the joint owner child. When a person co-owns property in a joint tenancy, they cannot deal with the property without the consent of the other co-owner. For example, a co-owner would be unable to dispose, transfer or sell property without agreement of the other co-owner and likely unable to refinance or mortgage their interest without the consent of the other.
A co-owner may have a creditor target their interest in the property as well. See you legal advisor to assist you in moving forward with this very important part of you estate plan and obtain the legal advice you need to leave dispose of your estate as you wish.
Disclaimer
The information provided on this website is merely an informative guide and should not be relied upon for legal advice. It is intended to provide general information only. It is recommended that you see a lawyer about your particular legal situation and request legal advice.
