Adding your spouse’s name to a bank or investment account is a good way to minimize the amount of probate fees that will be payable on your death as the account will pass to your spouse outside of your estate by right of survivorship.
Adding your children’s names can be more problematic. The issue that arises on your death is whether you intended the money to go to that child or your intention was for that child to share the money with their siblings after your death, i.e. the joint ownership was only created to avoid probate fees. At law this would be called a resulting trust. A resulting trust arises where someone gifts property to someone else with the intent that the person will hold the property until a certain date and then return it to the other person or to their estate.
In order to avoid this controversy when creating joint accounts with one or more children, it’s is important to ensure there is collateral evidence of your actual intention, such as a clause in your Will saying that the joint tenancy is a true joint tenancy and should pass to the survivor, or a letter of intention saying that the joint tenancy was created to avoid probate fees and the asset should be split equally among all of your surviving children.
FAQ
1) What is joint tenancy?
Joint tenancy is when two or more people own an asset together, such as a bank account or real property, with each owning an equal share.
2) What is right of survivorship?
When one joint owner of an asset dies, their share of the asset passes directly to the surviving joint owner(s) without becoming part of the deceased person’s estate or being subject to the terms of the deceased’s Will. Joint assets do not need to go through probate.
3) What do I need to do if I am the survivor of an asset held in joint tenancy?
If you are the surviving joint holder of a bank account, the bank will typically need the original or a certified copy of the death certificate so the deceased’s name can be removed from the account. If you are the surviving joint holder of real property, you will need to do a “transmission of ownership” so that you and (any other surviving joint tenants if applicable) can take sole ownership of the property. This typically involves providing an original death certificate to the Land Title Office and preparing a Property Transfer Tax (PTT) Return which will include a tax exemption under the rules of survivorship.
For more information, or help with an estate, please contact Deborah Todd Law at 250-590-6226 or use our contact page.
Deborah A. Todd
