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Joint Ownership
the Good, the Bad and the Ugly
What you need to know before owning assets jointly
By James Dolan
Let’s face it: estate planning isn’t the easiest personal finance
topic. After all, thinking about one’s eventual demise is hardly
enjoyable. Then again, avoiding the topic altogether isn’t a
viable option. By ignoring some of the common strategies for
minimizing taxes and fees upon your death, you risk leaving
behind a legacy of financial and legal hassles for your heirs.
One of those strategies is joint ownership, an estate-planning
strategy that’s become more popular over the years. The
general idea: by holding assets jointly with your future heirs
(your spouse, for example, or your adult children), you can
pass on your assets quickly and efficiently. When your assets
are jointly owned, they don’t have to go through probate,
which can potentially save your heirs thousands of dollars. In
addition, those assets pass on to your heirs quickly, without
unnecessary delay. So far, creating a Joint OwnershipWith
Right of Survivorship (JWRS) sounds very beneficial — so
what are we waiting for...
Hang on just a second. It’s true, joint ownership can be an
immensely powerful tool that can save your estate thousands
(perhaps tens of thousands) of dollars in fees. But it can also
bring on a host of unintended consequences. Depending
on your personal circumstances (and the assets which you’re
intending to own jointly), those consequences could result in
a full-on estate-planning disaster.
Joint-ownership basics
In Canada, there are two distinct forms of joint ownership:
Joint tenants
when a property is held in joint tenancy,
if one joint tenant dies, the entire property belongs to the
remaining, surviving joint tenant(s).
each person owns a half, or a
third, or some other portion of the asset in question. That
portion belongs only to that individual and, upon his or her
death, the person may pass it on to heirs without implica-
tion on the ownership portions of the other owners.
An example will make the practical difference between
these two forms of joint ownership a little more clear.
Imagine that Michael, Stephen and Neil are three brothers
who are
joint tenants
in their family cottage. Michael passes
away. Even though Michael would like to leave his share to
his wife, he can’t because he’s a joint tenant. Stephen and
Neil now own the property. Stephen dies and Neil now
owns the entire property. Because Neil is the only name
remaining on the title, he can leave the property to his
wife and children. There is nothing for Michael or Stephen’s
Now, let’s imagine that Michael, Stephen and Neil are
of the cottage — each owns an equal
third. When Michael passes away, he leaves his share to his
wife Karen. Now the owners are Karen, Stephen and Neil.
Then Stephen passes away and leaves his shares to his two
adult children, Allen and Haley. Now the owners are Karen
(who owns a third), Allen and Haley (each of whom own
one-sixth) and Neil (who still owns a third). In this way, each
of the individual owners retains control of his or her share.
When it comes to estate planning, joint ownership almost
always means joint tenants. This is the strategy which we’ll
discuss for the remainder of the article.