The transfer of property into joint ownership, whether it be real property, bank accounts, or other assets, is a common estate planning tool. Property is often transferred into joint ownership so that it passes to the surviving joint owner outside of the original owner’s estate. In B.C., you are permitted to put your property into joint ownership to avoid probate fees and potential wills variation claims. However, disputes still arise with respect to what a deceased person intended when they transferred their property into joint ownership.
The B.C. Supreme Court recently considered this issue in Di Giacomo v. Di Giacomo 2021 BCSC 2313. In Di Giamoco, the will-maker had two sons. In 2000, he made a will dividing his estate into three equal shares, one for each of his two sons, and one for his brother. The evidence was that he did so because (1) he appreciated that his brother provided him with assistance, and (2) he was unhappy with certain behavior of his sons.
The deceased met with a lawyer to prepare and sign the will. At this meeting, the lawyer explained that if the deceased transferred his real property into joint ownership with his sons and his brother, then (1) he would avoid paying probate fees on this asset, and (2) his sons could not challenge his will, insofar as the real property was concerned. The deceased transferred title to the property to himself, his sons, and his brother in joint tenancy.
In 2003, the deceased changed his will. Under the terms of the new will, except for a $500 bequest to his wife, his estate was to be divided equally between his two sons. His brother would no longer receive anything under his will.
The issue was whether the deceased intended to irrevocably gift the real property in 2000 to his sons and brother in equal shares, or whether the property is held in resulting trust for the estate.
The Court identified the three possibilities when property is put into joint tenancy:
- The creation of a true joint tenancy, in which each of the joint tenants is an owner of the whole, with each enjoying the full benefit of property ownership, and with the ultimate survivor enjoying the whole title;
- The creation of a resulting trust, where only one joint tenant owns the beneficial interest and the other holding the title in trust for the other with no beneficial interest; and
- A gift of the right of survivorship, where a joint tenant is gratuitously placed on title with no beneficial interest in the property until the death of the donor.
Where there is a gratuitous transfer of land to an independent adult child, the presumption of resulting trust applies. The donee (in this case the brother) must establish, on a balance of possibilities, that the deceased intended to make an irrevocable gift at the time of the transfer. It should be noted that the donor may intend to gift the right of survivorship, but continue to deal freely with the property throughout their lifetime.
In Di Giamoco, the Court held that the brother failed to prove that the deceased intended to irrevocably gift the right of survivorship. The evidence regarding the deceased’s intention was “at best, indecisive.” The court was not convinced that the deceased was fully informed of the consequences of transferring the property into joint tenancy. The Court observed that the deceased’s English was limited, and he was relying upon a translation of the discussions into Italian. There was no evidence that the lawyer specifically advised the deceased that the transfer would be irrevocable. The Court also relied upon the fact that the deceased changed his will three years later to provide for his sons and not also his brother, and the evidence indicated that he believed this would include the real property.
This case serves as a reminder that there are pitfalls when using a transfer into joint ownership as an estate planning tool. The donor/deceased’s intentions must be clear, and they must be fully informed and understand the effect of the transaction.