Why The Full Monty Must Be Done Properly
Date: 28 Jan, 2024| Author: Fred Streiman

The 2023 decision of Justice Robert Charney in Jackson v. Rosenberg is as the judge himself describes, “a Cautionary Tale for persons who might be tempted to use joint tenancy to avoid paying probate fees”.

This is an example of Estate Litigation before there is even an estate.

The case is a relatively long and complicated analysis of a fact situation which seems to have been triggered by a ridiculous conversation which we will describe later. The case emphasises that if one is going to use transferring ownership of money in the bank or a house into joint tenancy to avoid probate it must be done properly such as using our Full Monty scheme or everything will go sideways. Using our search window will pull up much information on the Full Monty. The facts of Jackson v. Rosenberg deal with a single man who tried to make arrangements for his great niece to receive his home after he died. In an effort to do so after his common law partner died, he added his great niece to the title to his home. Title was registered as Joint Tenants, which means an automatic right of survivorship. All went well and the great niece and her great uncle remained close.

One day after a family dinner in the absence of the great niece her husband foolishly told the great uncle that it was his intention to sell the house and to move to a larger property on a golf course and to have the great uncle come to live with them. This triggered a panic attack on behalf of the great uncle who felt as if his own home was about to be sold under him. Why the great niece could not simply have waited for her great uncle to pass away and to receive her survivorship gift/inheritance in due course is an astounding proposition yet that is what happened. Much turned on the great uncle’s intention when he transferred the home into joint tenancy with his great niece. Was she now a half owner of the home? What did she actually receive as a result of the transfer? Justice Charney made it quite clear that all that had occurred was that a definitive gift had actually been made to the great niece, but it was a conditional gift. It was in essence the great niece betting that if she outlived the great uncle then and only then would she receive a survivorship interest in the property. Or more plainly put – she had to wait for the great uncle to die before she got the entire house. The great uncle was successful in having ownership of the home returned to him alone and that until he died the house was his solely and he had every right to mortgage, transfer or sell it without the consent of the great niece.

The judge brought us back to the 2007 case of the Supreme Court of Canada in Precor v Precor, which stands for the rule that a transfer without payment is not a real transfer unless you can prove it was a gift. Much law was involved in this case, but all the average reader needs to appreciate is that one cannot simply start adding people’s names to homes without giving due care and attention to the effect. Justice Charney pointed out an attempt to save admittedly thousands of dollars in Probate fees was more than overcome by the legal fees spent in the lawsuit. All of it could been avoided by simply doing the proper legal work up front such as using the Full Monty strategy and all of the uncertainty would have been avoided.

The Justice referred to a conflict in the law across Canada. The decision made by Justice Charney was based upon his view of the law of Ontario and this author humbly agrees with him. The courts in Alberta and Saskatchewan have a different view on the ability of using the severance of a joint tenancy to get rid of the right of survivorship. Justice Charney pointed out that the law in Ontario is different from Saskatchewan and Alberta. Severance is legally cutting ownership of a property into individual portions with no right of survivorship.

In Alberta and Saskatchewan one of the joint tenant owners must provide notice and obtain the consent of their co-joint tenant before severance can be effected. However, while the great uncle was able to in essence take back much of what he had gifted to his great niece he was not able to take back the right of survivorship. That was something that was deemed to have been a perfected gift and as to the 50% of the home that was in her name, she would be entitled to receive that interest should she outlive her uncle and he continued to remain to be the owner of the home at the time of his death. However, this could be a hollow right in that the great uncle would have been legally entitled to sell the home and therefore the right of survivorship would have applied to in essence nothing, thereby frustrating the gift to the great niece.

Many different conclusions can be reached from the case but the most important one is consulting a lawyer that knows what they’re doing and prepare proper documents. The case is much more complicated than this one takeaway but hopefully it is a lesson that can be observed by all.