Common-Law Partners and Joint Property When One Partner Dies

If you live with a partner but are not married, Ontario's default inheritance rules do not treat you like a spouse. Many couples hear that putting a home or bank account in joint names solves this. It can help, but only if the ownership is set up the right way and stays that way.

This article explains how joint ownership works for unmarried partners, where it can fall short, and what to check. It is general information, not advice for your own situation.

What the law does and does not give you

Ontario says a common-law spouse does not inherit under the Succession Law Reform Act when someone dies without a will. Its Family Law Act equalization and election rights are for married spouses, and common-law couples are not legally required to split property acquired while living together.

That is why ownership matters so much. Ontario explains that the assets in an estate are distributed depending on how they are owned, with money and property jointly owned with another person given as examples.

How joint ownership works as protection

If you own property as a joint tenant, it passes automatically to the surviving owner when you die. The right of survivorship applies only to interests held in a joint tenancy. Property that does not pass by survivorship goes to the deceased's personal representative.

Because survivorship property passes outside the estate, Estate Administration Tax excludes assets under joint ownership that automatically become the other owner's.

Ways joint protection can fall apart

The Court of Appeal for Ontario recognizes three ways to sever a joint tenancy: one owner dealing unilaterally with their own share, such as selling or encumbering it; a mutual agreement; or a course of dealing showing the interests were mutually treated as severed. A secret intention is not enough.

• A joint tenant can sever by registering a transfer to themselves, after which the registrar shows them as a tenant in common with the other owners.
• Registering a charge (mortgage) by fewer than all joint tenants does not automatically sever the tenancy, but severance occurs if the lender enforces by power of sale or foreclosure.
• If a joint tenant who charged their interest alone dies first, the survivors are entered on title subject to the charge unless it is discharged.
• A will cannot by itself sever a joint tenancy, so survivorship takes precedence over it.

If you rely on survivorship, check the title and account records from time to time, especially after a relationship breakdown or a refinancing.

Paperwork, land transfer tax and income tax

For land, the survivor generally registers a survivorship application. In Land Titles it includes a statement that the applicant held the property as joint tenant with the deceased and is entitled as surviving joint tenant, with the date of death. For deaths on or after March 1, 1986, it must also include a Family Law Act statement, signed by a solicitor. Forms have changed recently, so a lawyer should confirm what is current.

Ontario's land transfer tax guidance says the Act excludes from disposition of a beneficial interest a transfer that happens by reason of the owner's death, which covers acquisition by operation of law such as a deceased joint tenant's interest.

For income tax, a person is treated as having disposed of capital property at fair market value immediately before death. Property passed to a surviving spouse or common-law partner resident in Canada may not produce a capital gain or loss on the final return, though the legal representative can elect out. The property must be locked in for the partner no later than 36 months after death, and an extension can be requested before the deadline. A home qualifies as a principal residence only if conditions are met, including that the deceased owned it alone or jointly, and it must be designated even if the gain is fully exempt.

What to do next

• Find out exactly how your home, bank accounts and investments are held: joint tenants, tenants in common or one name.
• Get a recent copy of title to any real estate and check for charges or transfers by one owner.
• List assets that pass by beneficiary designation or survivorship and those that would fall into the estate.
• Talk with your partner openly about whether the joint ownership still reflects your wishes.
• Speak with an Ontario estate lawyer about gaps, since common-law partners lack intestacy rights.
• If your partner has died, ask a lawyer to handle the survivorship application and tax filings so the deadlines are not missed.

Frequently asked questions