Does Joint Ownership Avoid Probate and Tax in Ontario?

Many people hear that putting a child or partner on title or on a bank account will keep the asset out of probate. Sometimes that is true. But it is not a simple shortcut, and the risks often surprise families later.

This article explains what right of survivorship does in Ontario, what actually escapes estate administration tax, and where adding a joint owner can backfire. It is general information, not advice on your situation.

What survivorship does

When an owner dies, property goes to the estate trustee only if no one else has a right to take it by survivorship. Property with a right of survivorship goes straight to the surviving owner, whether or not there is a will.

That also means a will cannot redirect it. A deceased joint tenant's interest goes to the surviving joint tenants, not to the will's beneficiaries.

Being on title together does not always create survivorship. Land given to two or more people is presumed to be held as tenants in common unless the document shows they are joint tenants. Spouses and common-law partners also hold as tenants in common unless the deed says otherwise.

What escapes estate administration tax, and what does not

For applications on or after January 1, 2020, there is no tax on an estate worth $50,000 or less, and above that the tax is $15 for every $1,000 (or part) of the estate's value. Value does not include jointly owned property that passes automatically to the other owner.

Probate is also not always needed. If a house is held in true joint tenancy and the surviving owner takes it, it can be dealt with without a Certificate of Appointment of Estate Trustee.

The resulting trust problem

The Supreme Court of Canada has said that for a transfer with no payment, the general rule is a presumption of resulting trust, and the person receiving it must show a gift was intended. An adult child added to a parent's account or asset is presumed to hold it in trust for the parent, and on death for the estate.

Only minor children benefit from the opposite presumption, a gift. An adult child's financial dependency does not trigger it, though it can be strong evidence against a resulting trust.

Courts may look at the bank documents, who controlled and used the funds, any power of attorney, the tax treatment of the account, and later evidence of the owner's intention at the time. If the asset is held in trust for the estate, it does not escape the tax.

Other risks of adding a joint owner

• Loss of control: any named holder of a joint account can withdraw at any time, and creditors of a holder with financial problems or bankruptcy could make claims on the money.
• Challenges from heirs: other heirs may challenge the survivor, who may need to show the deceased meant the funds as a gift.
• Capital gains: giving capital property away is treated as a sale at fair market value when you give it, and the automatic rollover covers gifts to a spouse or common-law partner, not children (except qualifying farm or fishing property).
• Tax on death: the deceased is treated as having sold their capital property just before death, even if it passes by survivorship. A transfer to a surviving spouse or common-law partner resident in Canada can roll over without immediate gain if it is locked in for them within 36 months of death.
• Support claims: for a dependant's support claim, joint accounts and property held jointly at death can be counted as part of the net estate.
• Matrimonial home: if a spouse dies owning a matrimonial home as a joint tenant with a third person such as a child, the joint tenancy is deemed severed just before death and the share goes into the estate.

What to do next

• Check how title is actually held; a parcel register can be searched through OnLand.
• Ask your bank what happens to a joint account when one holder dies.
• Write down why you want the joint ownership, since intention matters.
• Talk to a lawyer and an accountant before adding anyone to title, especially a child or a home that may be a matrimonial home.

Frequently asked questions