It is very common for elderly parents to hold property jointly with their adult children. Often parents do this in order to make it easier to manage the property – which could be real estate, bank accounts or other assets – while they are still alive. Having a trusted child’s name on an account, for instance, means that the adult child can help pay bills from the account or manage the investments held in that account.
Another very common reason to place property into joint tenancy with a child is to avoid having the property pass through the estate and be subject to probate fees. When one joint tenant passes away (usually the parent), then the entire interest in the property passes to the surviving joint tenant (usually the child) by operation of the common law “right of survivorship.”
As you might imagine, problems can arise when a parent passes away and the jointly-held property passes to an adult child by right of survivorship. If there are additional siblings who are beneficiaries under a will, the operation of the right of survivorship means that there are fewer assets in the deceased parent’s estate that will pass to them. When the asset in question is an expensive piece of Vancouver real estate, for example, this could constitute the majority of the assets in the parent’s estate. Because of this, courts have held that there is a presumption that an adult child who receives property in this way is actually holding it in trust for their deceased parent’s estate and for the beneficiaries of the estate. This is called a “resulting trust.”
The presumption of a resulting trust can be rebutted in cases like these if the child who receives the property by right of survivorship can show evidence that the parent intended them to receive the property. All kinds of evidence can be put forth to demonstrate the transferor’s intent, but by far the best way to avoid these disputes is to have the transferring parent put their intent in writing somehow – a deed of gift, for instance.
Ultimately it is up to the court to decide if the parent meant for the jointly-held property to pass to their child by right of survivorship or whether the parent simply placed title to it in joint tenancy for the sake of convenience or some other reason and apply the presumption of resulting trust. Leaving clear evidence of a parent’s intent behind for their children should be a priority for any parent when planning their estate so as to avoid messy estate litigation between their children.