When property is placed in the names of two people as joint tenants, the questions arises of whether this is done only to facilitate the transfer of the asset on death or whether it was intended to be a gift of the asset to the other person. Once the donor has died it is difficult to determine what their intention was at the date the joint tenancy was created.
The law used to be that if no contrary intention could be proven there would be a presumption that the donor intended to gift the property to pass to the joint tenant on death as their separate property.
A recent decision of the Supreme Court of Canada in Pecore v. Pecore1 changes this and states that if no intention can be proven to gift the property there is a presumption that the joint tenancy was created to facilitate the transfer of the asset on death and the recipient holds the asset in trust for the donor’s estate. This is what is called a resulting trust.
Pecore v. Pecore, [2007] 1 S.C.R. 795, 2007 SCC 17
- The Presumption of Resulting Trust
24 The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
25 The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of a resulting trust.
26 In cases where the transferor is deceased and the dispute is between the transferee and a third party, the presumption of resulting trust has an additional justification. In such cases, it is the transferee who is better placed to bring evidence about the circumstances of the transfer.1
Because of this it is important when putting property which may be real property, a bank account or an investment account in joint tenancy with another person to somehow record in writing what the true intention is either in a memorandum or in your will.
In your will you could insert a paragraph which says either “all joint tenancies which I have created during my lifetime are true joint tenancies and it is my intention that the joint tenant receive the property on my death as their sole and separate property” OR “it is my intention that all joint tenancies created during my lifetime not be construed as passing the beneficial interest in my property to the joint tenant and that the beneficial ownership of the property which is placed in joint tenancy remains mine.”
