Estate Planning: Understanding Joint Tenancy

Joint tenants are often comforted by the doctrine of survivorship – the survivor(s) take the property absolutely upon the death of the other holder(s).

However, many would be surprised to hear that joint tenancies that are thought to exist might in fact have been severed long ago, even if this was not the intention of the joint holders.

Once severed, joint tenants become tenants in common, no longer holding their respective property together in one share, but together in their respective percentages without the right of survivorship. This can have drastic implications for estate distribution and therefore severance of joint tenancies should be understood to prevent unintended consequences.

The three most common ways that joint tenancies are severed are by express or implied agreement, by a joint tenant transferring or encumbering their own share unilaterally, or by a separation under the family law legislation in each province.

The law presumes tenancy in common, therefore it should be understood how to create and maintain a joint tenancy. There are four essential conditions that must exist for ownership to be considered joint. These essential preconditions are known as the “four unities” and will be briefly described below.

Unity of interest must exist, meaning essentially that all holders must have an equal interest in the property being held. It is not possible under a joint tenancy to say that one holder owns 60% while the other holds 40%; all must share beneficial entitlement equally.

The second unity, unity of possession, is similar to the first, but refers to the fact that all owners own the entire property and must treat the property as one unit. All joint owners must have their title created at the same time and it must last for the same duration. This is known as the unity of time. The final precondition, unity of title, directs that all joint owners must have their interest created by the same legal instrument, be it a deed of gift, a will, or some other document.

Understanding the creation and severance of joint tenancies is key to proper estate planning. This area of the law is complicated by the doctrine of resulting trust that applies to gifts or rights of survivorship to adult independent children and can therefore be quite complicated. Legal advice is highly recommended when considering the implications of acting on one’s interest in jointly held assets, or when considering entering into a relationship of joint tenancy.

Greer M. Jacks was called to the Bar of the Province of British Columbia on November 23, 2013. As a practicing lawyer in the city of Victoria under the age of 30, Greer has a unique perspective of wealth preservation and estate planning in his professional and social milieu.

Reference: Professional Legal Training Course 2014, Practice Material Wills; Kirsten Jenkins, Raphael Tachie, Hugh McLellan, Sadie Wetzel; The Law Society of British Columbia.