What Happens to a Jointly Owned Property if One Owner Dies in Ontario?
When a joint owner of property dies in Ontario, the outcome depends on how the property is legally structured.
If the property is held in joint tenancy with right of survivorship, ownership automatically passes to the surviving owner without going through probate or the deceased's will.
This process can become complicated depending on whether the property is held as joint tenants or tenants-in-common, and whether certain legal presumptions apply.
The type of joint ownership determines inheritance rights, tax obligations, and potential family disputes.
We'll explore the different ownership structures available in Ontario and the legal and tax implications to consider.
Potential complications can arise when joint property owners pass away, so understanding these distinctions is crucial for estate planning or dealing with a co-owner's death.
Understanding Joint Ownership Structures in Ontario
In Ontario, property co-ownership operates under two main structures that create different legal outcomes when an owner dies.
Joint tenants automatically transfer ownership to survivors, while tenants in common pass their share through their estate.
Joint Tenants and the Right of Survivorship
Joint tenants hold equal ownership interests in a property with a key feature called the right of survivorship.
When one joint tenant dies, their ownership interest doesn't pass through their will or estate.
Instead, the deceased owner "drops off title" and the surviving joint tenant becomes the sole owner.
This transfer happens by law, not through probate court proceedings.
Key characteristics of joint tenancy include:
Equal ownership shares among all owners
Equal decision-making power for all parties
Automatic transfer to survivors upon death
No probate required for ownership transfer
You can complete the ownership transfer by registering a deed of transmission with the Land Registry Office.
This process requires only a death certificate and a real estate lawyer can handle it at modest cost.
The right of survivorship overrides any instructions in a will.
Even if a joint tenant's will states their property share should go to someone else, the surviving joint tenant receives full ownership.
Tenants in Common: Key Differences
Tenants in common own distinct shares of a property that can be unequal and operate independently from other owners.
Unlike joint tenancy, there is no right of survivorship between tenants in common.
When a tenant in common dies, their ownership share becomes part of their estate.
This share passes according to their will or intestacy laws if no will exists.
Tenants in common ownership features:
Unequal ownership shares permitted
Individual shares can be sold or transferred
No automatic transfer upon death
Deceased's share goes through probate
Each tenant in common can sell or mortgage their share without permission from other owners.
They can also leave their share to anyone in their will.
If a tenant in common dies with debts, creditors can claim against their share of the property.
This creates potential complications for surviving co-owners who may need to deal with estate creditors.
Role of Joint Tenancy in Estate Law
Ontario estate law treats joint tenancy between parents and adult children differently than other joint ownership arrangements.
The law presumes that financially independent adult children hold jointly owned assets in trust for their parent's estate.
This presumption is called the Rebuttable Presumption of Resulting Trust.
It means joint bank accounts and real estate don't automatically belong to the adult child when the parent dies.
The adult child must prove the parent intended to gift the asset to them.
Courts require clear evidence beyond simple oral statements that "mom wanted me to have this."
Estate law implications include:
Joint assets may belong to the estate, not the surviving child
Probate taxes may apply to jointly held assets
Other beneficiaries may have claims to joint property
This presumption applies to real estate and savings accounts held jointly between parents and adult children.
It doesn't typically apply to registered accounts like RRSPs or TFSAs with designated beneficiaries.
Joint tenancy with spouses operates differently and generally passes to the surviving spouse without the resulting trust presumption.
Wondering what happens when a co-owner of property passes away? To learn more about the key differences between tenants in common and joint tenancy, and how they affect ownership rights.
Transfer of Ownership After the Death of a Co-Owner
When a joint tenant dies, the surviving owner must complete legal steps to update the property title.
This process removes the deceased owner's name and confirms sole ownership through right of survivorship.
How Property Title Changes Are Registered
The transfer happens automatically when a joint tenant dies.
However, you must register this change with the Land Registry Office to update the official records.
The property title will show both owners' names until you complete the registration process.
This can create confusion for future transactions.
You need to file specific documents to reflect the change in ownership.
The Land Registry Office requires proof of death and proper forms to process the transfer.
Required Documents:
Death certificate (certified copy)
Current property deed
Deed of Transmission
Application form for title change
The registration fee depends on the property value.
Most transfers cost between $75 and $400 in government fees.
Requirements for a Deed of Transmission
A Deed of Transmission is the legal document that transfers ownership from the deceased to the surviving joint tenant.
You must prepare this document carefully to avoid delays.
The deed must include specific information about the property and both owners.
You need the legal description, property identification number, and full names as they appear on the original title.
Essential Information Required:
Full legal names of both owners
Date of death
Property legal description
Relationship between owners (if any)
Confirmation of joint tenancy with right of survivorship
The surviving owner must sign the deed in front of a lawyer or commissioner of oaths.
The signature must be witnessed and notarized to be valid.
The deed should reference the original property deed and clearly state that ownership transfers due to the right of survivorship provision.
Steps to Remove a Deceased Owner from Title
The process begins with gathering the death certificate and original property documents.
You should obtain multiple certified copies of the death certificate for your records.
Next, prepare the Deed of Transmission with help from a real estate lawyer.
This ensures all legal requirements are met and reduces the risk of rejection.
Submit the completed application package to the Land Registry Office.
This includes the deed, death certificate, application forms, and required fees.
Step-by-Step Process:
Obtain certified death certificate
Gather original property title documents
Prepare Deed of Transmission
Complete Land Registry application forms
Submit documents with fees
Receive updated title showing sole ownership
The Land Registry Office typically processes these applications within 10-15 business days.
Delays may occur if documents are incomplete or require corrections.
Once approved, you receive a new title showing only the surviving owner's name.
This confirms sole ownership and eliminates any probate requirements for the property transfer.
Joint Tenancy Versus Tenants in Common: Inheritance Outcomes
Joint tenancy creates automatic ownership transfer to survivors, while tenants in common allows each owner's share to pass through their estate.
These differences affect probate requirements and family inheritance outcomes.
Passing of Property Outside the Estate
Joint tenancy operates on a "last person standing" principle.
When one joint tenant dies, they drop off the title and the surviving owner continues as the full owner without any transfer process.
The property never enters the deceased's estate.
The deceased person's will has no effect on the property, even if it says something different.
Tenants in common works differently.
Each owner holds a specific percentage of the property and when a tenant in common dies, their share becomes part of their estate.
Their will controls what happens to that share.
If they have no will, Ontario's Succession Law Reform Act determines who inherits.
Property ownership becomes divided between the surviving original owner and the deceased's beneficiaries.
Impact on Probate and Wills
Joint tenancy avoids probate entirely.
Since the property doesn't enter the estate, you don't need court approval for ownership transfer.
Estate Administration Tax doesn't apply to jointly owned property.
The property value isn't included in probate calculations, which can result in significant tax savings on large estates.
Tenants in common requires full probate processing.
The deceased's share must go through estate administration.
This means:
Court approval needed
Estate Administration Tax applies to the property share
Delays while probate completes
Legal costs for estate administration
The estate executor must obtain proper valuations and determine the exact worth of the deceased's percentage interest.
Consequences for Blended Families
Joint tenancy can create problems in blended families.
If spouses separate but don't sever the joint tenancy, the property still passes to the ex-spouse automatically.
Children from previous relationships get nothing from jointly owned property.
The surviving spouse receives everything, potentially cutting out the deceased's children entirely.
For example, John owns a house jointly with his second wife Sarah and has children from his first marriage.
When John dies, Sarah gets the entire house regardless of what John's will says.
Tenants in common protects children's inheritance rights.
Each spouse can leave their share to their own children, ensuring both families receive something from the property value.
Blended families should consider tenants in common.
It allows each spouse to control their share through their estate plan and creates fairer outcomes for all family members.
Legal and Tax Implications of Jointly Owned Property
Joint property ownership creates significant legal and tax consequences that differ from sole ownership.
Adding someone to title as a joint owner can trigger immediate tax obligations and affect estate planning strategies.
Taxation of Property Transfers
When you add a non-spouse to property title as joint owner, the Canada Revenue Agency treats this as a deemed disposition for tax purposes.
The original owner must report capital gains on the portion transferred.
For example, adding two children as equal joint owners means reporting gains on two-thirds of the property's value.
Key tax consequences include:
Immediate capital gains tax liability
No actual cash received to pay the tax
Future income attribution rules may apply
Adding a spouse typically occurs at adjusted cost base with no immediate tax consequences.
However, any future income or capital gains attribute back to the original spouse owner.
When a joint owner dies, their interest passes to survivors by law.
The deceased's estate must still pay capital gains tax on their share, even though the property doesn't go through probate.
Potential Pitfalls and Risks
Joint ownership with adult children can create unexpected problems for estate planning and family relationships.
Principal residence exemption loss can happen when you add a child who already owns their primary residence.
The child's portion of your property cannot claim the full exemption.
Land transfer tax may apply when adding joint owners in some municipalities.
This creates additional upfront costs beyond legal fees.
Estate imbalance becomes problematic when joint property passes to some children but not others.
The estate pays taxes on the deceased's share while receiving no proceeds to cover these costs.
Family law implications arise if a joint owner divorces.
Their spouse may claim an interest in the jointly owned property during divorce proceedings.
Legal challenges can occur if joint owners disagree about selling, maintaining, or using the property during the original owner's lifetime.
Switching from Sole Ownership to Joint Tenancy
Switching from sole to joint ownership needs careful planning. This helps minimize tax consequences and legal risks.
Resulting trust arrangements let you transfer legal title while keeping beneficial ownership with the original owner. This strategy may avoid immediate tax consequences but might not avoid probate.
Get professional legal and tax advice before making ownership changes. Consider provincial probate rules, family dynamics, and estate planning goals.
Documentation requirements include proper legal transfers and updated insurance policies. You also need to revise estate planning documents like wills and powers of attorney.
Timing matters. Market values at the time of transfer affect capital gains calculations.
Waiting until death may result in a stepped-up cost basis for heirs in some situations.
Alternative strategies like formal trust arrangements or life insurance can achieve similar goals. These options may avoid joint ownership complications.
Dealing with Special Circumstances and Disputes
Joint property ownership can face complications beyond basic survivorship rights. Ontario law offers specific ways to sever joint tenancies and handle disputes or simultaneous deaths.
Severance of Joint Tenancy
Any joint tenant in Ontario can convert joint tenancy to tenants-in-common ownership. This process, called severance, removes the right of survivorship.
How severance works:
A real estate lawyer files the severance documents.
No consent from other joint tenants is needed.
The property becomes tenants-in-common automatically.
After severance, each owner holds a distinct share. When one owner dies, their portion passes through their estate.
Severance often happens after relationship breakdowns. It's also common in blended families for estate planning.
Important considerations:
Severance can happen without notice to other owners.
Surviving joint tenants may later find they don't own the entire property.
A title search shows the current ownership structure.
We recommend regular title searches. This prevents surprises during estate settlement.
Simultaneous Deaths and the SLRA
The Survivorship and Liquidation of Rights Act (SLRA) covers cases where joint tenants die at the same time. The law sets rules for property distribution when survivorship is unclear.
Under the SLRA, we treat joint tenants who die together as tenants-in-common. Their shares pass through their estates.
Key scenarios include:
Car accidents involving spouses
Natural disasters affecting multiple owners
Medical emergencies with unclear timing of death
The Act requires clear evidence about when each person died. Medical records and coroner reports become important documentation.
Each estate receives its proportional share. This prevents one estate from claiming the entire property.
Contested Ownership and Family Law Issues
Ontario estate law presumes that financially independent adult children hold jointly owned property in trust for their parent's estate. This is called the Rebuttable Presumption of Resulting Trust.
The presumption applies to:
Real estate held in joint tenancy
Joint bank accounts
Most unregistered investments
Family law complications arise when:
Adult children claim full ownership after a parent's death
Spouses separate and dispute property rights
Creditors challenge joint ownership
The adult child must prove the parent intended a gift. We look for documentation like letters, emails, or witness testimony.
Common dispute factors:
Timing of joint ownership creation
Whether the deceased received legal advice
Will provisions about joint property
Adult child's refusal to treat assets as estate property
These disputes usually need court applications. We recommend filing "Applications for Directions" because they resolve faster and cost less than trials.
Good documentation is critical in these cases. More evidence leads to a clearer resolution path.
Best Practices for Estate Planning and Joint Property
Joint property ownership needs careful planning to fit into your estate plan. Get professional legal guidance for complex family situations or valuable assets.
Incorporating Joint Ownership in Your Estate Plan
Joint ownership works best as part of a complete estate plan. Start with clear goals about what you want for your property.
Document your intentions clearly. Write down whether the surviving owner should keep the property or hold it for your estate. This helps prevent legal disputes.
Consider the right of survivorship carefully. Adding someone as a joint owner means they get the property when you die. Make sure this matches your estate plan.
Think about taxes before making changes. Adding a joint owner can create tax problems. You might face capital gains tax when you transfer property.
The surviving owner might also have tax issues later. Joint ownership doesn't always avoid probate fees in Ontario.
If the property is held in trust for your estate, it may still be subject to the 1.5% probate fee.
Review your will regularly. Joint property bypasses your will. Make sure your will still fits after adding joint owners.
When to Seek Legal Advice
Get legal help before adding anyone as a joint owner. Estate law, real estate law, and tax law all affect these decisions.
Complex family situations need professional guidance. This includes blended families, disabled beneficiaries, or family disputes.
Contact a lawyer if you want to remove someone from joint ownership. This process can be complicated and may need court action.
Get advice about tax planning. A lawyer can explain how joint ownership affects income tax, capital gains, and probate fees.
Seek help right away if someone questions your joint ownership. Early legal advice can prevent costly court battles.
Conclusion
Joint property ownership creates complex legal situations when an owner dies, with outcomes depending on whether you have joint tenancy or tenancy in common. These situations often lead to family disputes, property transfer delays, and tax complications that require professional guidance to navigate effectively.
Understanding your rights and the type of ownership structure is crucial for protecting your financial interests and family relationships. Key considerations include estate planning implications, tax consequences, and potential disputes between surviving owners and beneficiaries.
Don't handle these complex matters alone. Contact B.I.G. Probate Law Ontario for expert guidance on jointly owned property after a death. Book a free consultation or call (289) 301-3338. Visit probatelawgroup.ca for more information about how we help Ontario families resolve joint property ownership issues efficiently and fairly.
Frequently Asked Questions
Joint tenancy with right of survivorship affects property ownership when one owner dies. Knowing the legal requirements and possible drawbacks helps property owners make better decisions.
What are the disadvantages of joint tenancy with right of survivorship?
Joint tenancy can create tax problems when Canada Revenue Agency sees adding someone to your title as a sale. This triggers capital gains taxes. You lose control because all owners must agree before selling. Your share becomes at risk if the other owner has debts, as creditors can claim against the property. Estate planning becomes harder because the property skips your will.
Do you have to remove a deceased spouse from a deed in Ontario?
You don't need to remove a deceased joint tenant from the deed. The surviving owner automatically becomes the sole owner when the other dies. The deceased person's name comes off the title by law with no probate needed. However, updating title documents makes future sales easier.
What is joint tenancy with a right of survivorship in Ontario?
Joint tenancy means each owner has equal access to the entire property. When one owner dies, their share automatically goes to the surviving owner without probate. All owners must have equal shares and rights. The right of survivorship ensures immediate property transfer upon death.
What is the survivorship rule for joint tenancy?
When one joint tenant dies, ownership automatically transfers to surviving joint tenants. The deceased owner's interest disappears completely. This happens by law with no will or probate needed. Surviving owners get equal shares of the deceased owner's portion.
What happens on the death of a joint tenant?
The surviving joint tenant immediately becomes the sole owner. The deceased person's ownership ends and doesn't become part of their estate. No probate is needed. The surviving owner can immediately sell, mortgage, or transfer the property without limits.
What is the difference between joint tenancy and joint with survivorship?
These terms mean the same thing in Ontario. Surviving owners automatically inherit the deceased owner's share. This differs from tenancy in common, where each owner's share becomes part of their estate when they die. Tenants in common do not have survivorship rights.