Joint Ownership with Your Adult Child: Be Sure to Document Your Intention

By: Jeffrey & Irene Joseph

Joint Ownership with Your Adult Child: Be Sure to Document Your Intention

Tags: Toronto, Real Estate, Property, Toronto Housing

Joint Ownership with Your Adult Child: Be Sure to Document Your Intention
 
It has become more and more common for people to hold their assets as joint with their adult children. Some do this as an estate planning strategy, as it will ensure that such assets pass directly to the surviving joint owner without being subject to probate fees, while others do this simply because they want to facilitate the administration of their assets by giving their adult child access and allowing them to deal with them on their behalf. No matter the reason, one should consider the potential legal and tax consequences that may arise from putting his/her assets in joint name with one other than his/her spouse.
 
Specifically, one must make sure to clearly document his/her intention in transferring assets into a joint ownership with their adult child. Whether one wants to give their assets to their child or simply wants their child to hold access to their assets on his/her behalf for whatever reason, this must be made evident.
 
When a property is held jointly between a parent and their adult child, with no evidence of the parent’s wish to gift that property, the law assumes that the adult child is holding the property in trust for the parent to facilitate the free and efficient management of the parent’s affairs. This means that the property would be deemed to belong to the parent’s estate upon the death of the parent. (Supreme Court of Canada decision in Pecore v. Pecore, 2007 SCC 17).
 
If an individual passes away without any evidence that they intended to hold their assets as joint, such assets can lead to disputes between the other siblings or family members who believe that the assets should belong to them. This could result in highly expensive litigation, or even worse, strained family relationships.
 
The documented evidence of a deceased parent’s intention to gift may include the following:

 
In summary, it is critical for anyone who is considering putting assets into joint name with their adult child to obtain legal advice to leave proper documentation of his/her intentions regarding the assets. This will guarantee that the individual’s wishes are carried out as intended after he/she has passed away and will ultimately protect the estate and the family from costly and detrimental litigation.