Does Jointly Held Property Avoid Probate in Ontario?

Many families add a child or partner to a house or bank account hoping to keep it out of probate. Sometimes that works, but it can also create problems.

This article explains when joint assets skip probate and estate administration tax in Ontario, and where the limits are. A lawyer can look at your documents and the family facts.

The general rule

Property passes to the estate trustee only if no one else has a right to take it by survivorship, and survivorship overrides the will. Ontario lists jointly owned property that passes automatically to the other owner as not counted in estate value for estate administration tax.

A house held in true joint tenancy by a surviving owner can be dealt with without a Certificate of Appointment of Estate Trustee.

Where joint ownership does not avoid the estate

• Tenants in common: land in two or more names is generally held as tenants in common unless the deed shows on its face that the owners take as joint tenants, and a tenant in common's share does not pass by survivorship.
• Resulting trust: an adult child added to a parent's asset without payment is presumed to hold it in trust for the parent, and on death for the estate, unless a gift is shown. A joint asset held on resulting trust for the estate does not escape the tax.
• Matrimonial home: if a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person, such as a child, and not with the other spouse, the joint tenancy is deemed severed immediately before death and the share goes into the estate.
• Last survivor: when the last joint owner dies, the land goes to that person's estate trustee.

Courts may look at the wording of bank documents, control and use of the funds, a power of attorney, and tax treatment to decide what the transferor intended. Financial dependency of an adult child does not create a presumption of gift, though it can be strong evidence against a resulting trust.

Estate administration tax and what is included

For applications on or after January 1, 2020, there is no tax on an estate worth $50,000 or less, though the return is still required. Above $50,000, the tax is $15 for every $1,000 (or part) of the estate's value, due when the estate certificate is issued.

Other limits: claims, family law and tax

• Support claims: for a dependant's claim, property held by the deceased and another as joint tenants, and joint deposits, can be treated as part of the net estate. For joint deposits, only the part that belonged to the deceased is counted.
• Equalization: a surviving spouse who elects equalization has property received by survivorship credited against the entitlement, unless a written instrument says it is in addition.
• Income tax: the deceased is considered to have sold capital property just before death, even if it passes by survivorship.
• Gifts to children: adding a child to title can be treated as a gift sold at fair market value, and the automatic rollover applies to a spouse or common-law partner, not to children (except qualifying farm or fishing property).
• Creditors: creditors could make claims on a joint account if a holder goes bankrupt.

What to do next

• List each asset and how it is held: title, account documents and beneficiary designations.
• Look for anything showing why a child was added.
• Ask your bank how it treats a joint account on death.
• Speak to a lawyer or accountant about tax and estate administration tax before you add someone to title or file a return.

Frequently asked questions