Estate Litigation – Ownership of Assets on Death
Many people own a home or other assets with their spouse or another person. One should consider what will happen to the property when the other owner dies. In some cases this may lead to litigation.
Types of Ownership
When a property is owned by more than one person, it can be owned as a tenancy in common or as a joint tenancy. The main difference between these two types of ownership is what happens when one of the owners dies.
In a tenancy in common each person owns an undivided interest in the asset. Therefore, if people own an asset as tenants in common and one of the owner’s dies, his or her interest passes to his or her estate. If the asset is held by the estate, the deceased owner’s interest in the property will be distributed according to that person’s will or according to the laws of intestacy (when a person dies without a will)
If an asset is owned in joint tenancy, the right of survivorship applies which means that on death, the deceased’s person’s interest in the asset automatically passes to the surviving owner.
As people often do not think about how their assets are owned, the owners’ intention when they purchased the asset as to the type or form of ownership may not be obvious.
The Owner’s Intention
Where the deceased owner’s intention is unclear, litigation may result to determine what the owner intended and who will receive the asset. If the other owner is claiming that the asset is held in joint tenancy, the beneficiaries under the will or the deceased’s next of kin who would inherit under intestacy may dispute the type of ownership.
Estate litigation may help determine the deceased’s intent when he or she purchased the asset or when he or she gave the other owner an interest in the asset. Unless there is evidence to the contrary, the law presumes that when two people own land, they own the land as tenants in common. However, if there is clear evidence that the deceased person intended to own the asset in joint tenancy and intended to give his or her interest to the other owner on his or her death by right of survivorship, the transfer will be valid and the property will remain with the surviving joint tenant. If it does not appear that the deceased person intended to give the other owner the right of survivorship, a Court may determine that a resulting trust applies and that the other owner holds the deceased’s person’s interest in trust for his or her estate.
Ending a Joint Tenancy
One of the owners who wishes to end the joint tenancy and prevent the right of survivorship from becoming effective on death, may sever the joint tenancy on his or her own. Once an owner severs a joint tenancy, the ownership of the property transfers to a tenancy in common.
An owner may sever a joint tenancy:
- by registering a transfer of the property at the Land Titles Office to him or herself;
- by reaching a written agreement with the other owner; or
- inadvertently, where the surrounding circumstances suggest that the ownership has been severed. For example, a joint tenancy may be severed if a couple divorces.