Joint Tenancy To Avoid Probate: Calgary Estate Lawyers
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Joint Tenancy To Avoid Probate: Calgary Estate LawyersJeff Kahane2020-01-11T16:01:02+00:00
BEWARE: Risks of Joint Tenants to Avoid Probate
The Danger Of Adding A Name Nn Title (Joint Tenancy) To Avoid Probate
Land can be owned in Alberta as joint tenants or as tenants in common. Joint tenants equally own the land. They also have a right of survivorship in Alberta. This means that if one of the joint tenants pass away, then the surviving joint tenants automatically get the share of the person who passed. It does not go into the person’s estate and is not subject to their will. Tenants in common do not have this right. Their specific percentage ownership is transferred as a part of their estate via their will. The Calgary lawyers at Kahane Law Office can help if you are considering doing this.
Joint Tenancy To Avoid Probate
Some people try to use joint tenancy to avoid probate. They do this to try to avoid taxes, probate fees, administrative probate process, legal costs, etc. While there are some potential cost savings. They are not as large as some people think. Government probate fees in Alberta max out at $400 for an estate. The problem is that there are some serious dangers to using joint tenancy to avoid probate. For more information you can watch our video on the pitfalls of avoiding probate. If you want to use joint tenancy to avoid probate, we are able to add people to title for a low flat rate on land title transfers.
Dangers of Avoiding Probate With A Joint Tenant
The following are the most common pitfalls to using joint tenancy to avoid probate:
Depending on the situation, the person being added as a joint tenant to avoid probate may be liable for taxes. Potential taxes include both income tax and capital gains. It is very important to learn of potential tax consequences before you transfer property.
Final Tax Return (death tax)
When property is held as a joint tenant, probate, the estate and final tax returns are avoided as the land is transferred right to the surviving joint tenant by way of a right of survivorship. The Canadian tax authorities have the ability to use the General Anti Avoidance Rule (GAAR). This means that they can take the position that the property was not genuinely held as joint tenants. This is more likely when the person being added to avoid probate does not contribute at all to the cost of home ownership in some way and does not live there. This means that the property may be taxed as if it was never transferred to use joint tenancy to avoid probate.
Loss of Control
After you add someone as a joint tenant to avoid probate, that person effectively owns an equal share of your land. This means that they will need to agree and sign off if you want to sell the property or refinance it. If they do not agree with you doing that, they can block your ability to deal with your land. This happens on the break down of family relationships or differences of opinion on how a person should deal with their assets.
Asset Creditors Can Seize
If, after you have added a joint tenant to avoid probate, the person who you have added as a joint tenant has debts, goes bankrupt, owes taxes or is sued (business, car accident, etc) your property that you added them on to as a joint tenant to avoid probate also may form part of their asset base for the creditor to attach to. This also holds true for bank accounts when a person adds someone else jointly. Joint tenancy to avoid probate, with respect to land or financial accounts, can result in the assets being seized.
Loss of Intended Distribution As Set Out In Will
If the person who adds a joint tenant to avoid probate has other beneficiaries, this strategy may be problematic. As stated, a joint tenant takes the whole of the land. It does not pass through the will. This means that no other beneficiary will receive the benefit of the land. This does not mean that this strategy cannot be a part of estate planning. This does mean that the person who does transfer property to a joint tenant for this purpose must be aware of this legality and make appropriate estate plans.
There is a further complication when property is transferred to a “new” spouse. When someone re-marries, there is often the intention that the land they own is to be for the benefit of their children or equally between both parties’ children. If the title to their home is transferred as joint tenant into the new spouse’s name, then this intention may be lost. The surviving spouse may change their will at any time and thus effectively cut off the children of the deceased joint tenant from any benefit of the estate.
Divorce of the Joint Tenant
There are several issues that can come into play with respect to the divorce of the joint tenant when avoiding probate. These may include an increase of spousal support payments, child support payments, division of matrimonial assets, etc.. The consequences of divorce often affects not only the original owner, but the joint tenant who the owner added to the title to avoid probate.
How to Reduce Some of These Risks Of Joint Tenancy To Avoid Probate
The best step to reducing the chance of these issues coming up is to put it all in writing. Set out the intentions of the parties. There will always be a choice of which benefit and resulting consequence that you intend. When using joint tenancy to avoid probate, it is always better to get it all legally drafted to protect yourself and your added joint tenant. While there are some advantages, they are often less dramatic than people think. People must educate themselves and then make an informed choice as to what is best for them and their estate before they add a joint tenant to avoid probate. Joint tenancy to avoid probate may cause more problems than it solves.
Getting Help From Lawyers To Avoid Probate
The Calgary probate lawyers and estate lawyers at Kahane Law Office help you when you want to avoid probate. We also help people use joint tenancy to avoid probate. CONNECT TODAY.You can reach us toll-free at 1-877-225-8817, 403-225-8810 locally oremail us directly here today to contact us.