Gifts by Joint Tenancy

The term “joint tenancy” is not uncommon in most households. It frequently comes up when people share ownership of assets, such as real property or bank accounts.

The common understanding of “joint tenancy” relates to survivorship; upon the death of a joint tenant owner, the surviving owner receives the deceased’s interest in the jointly owned property. As a method of estate planning, people sometimes add family members as joint tenants, so that property transfers by right of survivorship on death. Although this may work out smoothly in some situations, it is not a one-size-fit-all arrangement.

If certain conditions are met, the courts may find a presumption of resulting trust against the survivor. This means the law presumes that the survivor is a bare trustee only, holding the joint asset in trust for the deceased person’s estate. A presumption of resulting trust in a joint tenancy might arise if the following conditions exist:

1. A and B are not spouses;
2. A transfers a joint tenant interest in A’s property to B;
3. B did not give valuable consideration to A (i.e. no payment or services rendered).

If all of the conditions are met and the survivor is deemed to hold the asset in trust for the benefit of the deceased’s estate, the survivor may still rebut the presumption by proving that the deceased intended to gift the property to the survivor. These situations, which can result in costly litigation, are avoidable if proper estate planning tools are utilized in conjunction with the joint tenancy arrangement.

To learn more, contact Cohen Buchan Edwards LLP at 604.273.6411 and speak with one of our lawyers.