One of the most common forms of estate planning, particularly among couples, is not to have any plan at all. That is often a very bad idea for a wide variety of reasons. However, there are circumstances where it is a good idea and can avoid many estate problems. This can be done by owning all assets in joint tenancy with your spouse. Generally, when one of the joint tenants dies, the entire interest in those jointly held assets passes to the other joint tenant (or tenants, if more than one). The jointly assets never become part of the deceased’s estate. The benefit of this is that there is no need to probate the estate and there is no estate to become the subject of a wills variation action.
A recent example of this principle is the B.C. case of Kurmis v. Zilinski. Mr. Derby and his second wife held all their assets jointly. The both contributed to and used these joint assets. When Mr. Derby died, one of his adult daughters from a previous marriage sought to claim a share of those assets. She said her father, who had never paid child support, had promised on her 16th birthday that he would provide for her in his will. She sought a variation of his will and claimed the transfer of assets into joint tenancy with his widow amounted to a fraudulent conveyance. The court held that a claim for reapportionment under the Wills Variation Act did not make the claimant a creditor under the Fraudulent Conveyance Act. As a result, the transfer of assets into joint tenancy could not be attacked as a fraudulent conveyance because the daughter was not a “creditor”.
That left the daughter’s claim solely as one under the Wills Variation Act. The daughter argued that her father’s jointly held assets were subject to a resulting trust. If so, the assets would be returned to his estate. The question of whether or not a trust exists depends on the intention of the transferor. Where the transferor, here the father, is dead, the courts often rely on legal presumptions to determine that intent. These legal concepts are the presumption of resulting trust and of advancement. The presumption of resulting trust can apply where a transfer is gratuitous. If so, the transferred assets are subject to a resulting trust. On the other hand, the presumption of advancement infers that the assets were given outright to the recipient. It generally applies between spouses and children.
However, in this case the court did not need to resort to these legal concepts. Instead, it was found that the deceased had not “transferred his interest (in the assets) into joint tenancy. His interest was always one of a joint tenant . . .”. The deceased and his wife had always held these assets jointly. Because of the right of survivorship, all those joint assets became her property on Mr. Derby’s death. They could not be the subject of a wills variation claim because they were never part of his estate.