Q: Should I put my land and other assets into joint names with my wife? If I do, can she drain the bank accounts and take off? Can she sell the land? As one gets older and is widowed, is it a good idea to put assets into joint names with children to avoid probate?
A: There are two different types of joint ownership. First, there is a tenancy in common. Under this arrangement two or more people own the property together, but are not entitled to the other’s share when he dies.
Read Also
Rural emergency room closures continue to be vexing problem
Staffing issues are at the root of disruptions and closures in hospital emergency departments, both in rural and urban Canadian locations.
Abel and his son own a section of land as tenants in common. Abel dies. The son is not automatically entitled to Abel’s share. Rather, Abel’s share goes to his estate and it is distributed according to his will or to intestate succession laws if there is no will. Both Abel and his son could sell their share to a third party although I suspect there is not a large market for a half interest of land.
The other type of joint ownership is a joint tenancy with the right of survivorship. The central feature of this is that if one of the owners dies, the survivor or survivors are entitled to the deceased’s share. This form of ownership is often used between spouses or between a parent and child as a way to avoid probate.
Is joint ownership right for you? There is no right answer. It really depends on your circumstances and your level of comfort in sharing your property interests.
Here are two examples of situations that I am familiar with.
A relative recently died. He had several bank accounts, bonds and guaranteed investment certificates, along with a quarter section of land in his name. The banks where he held his money were each willing to transfer investments held in his name to the surviving wife without probate. However, land can only be transferred with letters of probate, so his estate will have to be probated with the addition of $2,000 in legal and court fees.
Joint shares
A friend owned some shares. She decided to put these in joint names with her daughter. The shares have risen in value and she wants to sell them. Her daughter sees this as part of her inheritance and refuses to consent.
On the plus side, a joint tenancy with a right of survivorship can avoid the cost and delay associated with having to probate an estate.
However, joint ownership is permanent. It means that you give up control over the property and you cannot reverse it unless the other joint owner agrees to transfer the property back. So if you and your son have a fight, you can’t ask for the land back.
Further, if an interest in land or shares is being transferred, there may be capital gains considerations to consider. If it is farmland, you may be able to use some of the capital gains exemptions. However, it would be wise to consult with a lawyer or accountant.
If you have a joint bank account with a spouse or child and each can access the account without the other, then indeed your wife could drain the account.
However, in the event of divorce proceedings, a court would consider that one party has already drained the account in deciding how to divide the balance of the property. Land, even if held in a joint tenancy with the right of survivorship, cannot be transferred without the signature of both owners.
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
