The potential dangers of adding children as joint tenants

Many people like to add the name of a child, or children, to their home. The hope is to avoid probate fees on the death of the parent, and have the asset go directly to the children.

However, before you make this decision, be aware of the following potential danger:

  • First, if you later have a change of heart and do not wish to leave property to that child, it may be impossible to “undo” what you have done
  • Second, if the child who is now on title, attracts a judgement creditor, the judgement creditor may be entitled to go after the child’s share of the home

In short, sometimes circumstances cannot be controlled. Once you add a person to your title, you have given legal rights to that individual. Creditors will be entitled to rely on the legal position you create when you add a joint tenant.

James Steele’s preferred practise area is estate litigation. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

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Robertson Stromberg announces the launch of the SK Estate Law blog

We are pleased to announce the launch of our new Estate Law blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents.

The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Check out the blog here and join the discussion.

 

Saskatchewan Estate Litigation Update

An interesting recent estate litigation decision out of Saskatchewan is Leason v Malcolm, 2020 SKQB 102.

Leason reminds us that once a  bequest is vested, it may not be divested. In other words, if a beneficiary survives the testator, but the beneficiary then dies before actually receiving their share of the estate, the  beneficiary’s estate will still be entitled to receive the share.

Background

In Leason, the deceased was one Donald Aronetz who died on September 9, 2018. At issue was a gift that his Will made to Jennie Leason. Jennie Leason then died on December 24, 2018, some 15 weeks after Mr. Aronetz had died.

Facts in Leason

Under estate administration law, the bequest to Jennie Leason in Mr. Aronetz’s will would have taken effect (would have vested) on the date of his death, September 9, 2018, when Jennie was still alive. Her subsequent death would have made no difference to that circumstance, and her share of the estate would be payable to her estate.

The bequest in Mr. Aronetz’s will, however, was unusally worded. It read as follows in paragraph 2:

2. … I gift my estate in equal shares unto any SURVIVING siblings, who at the present time are named as follows: (a) Jennie Leson [sic] …, (b) Anne Malcolm …, (c) John Aronetz …, (d) Lillian Whitfield …, (e) Mike Aronetz …, (f) Nick Aronetz …. In the event either of these siblings predecease me or die before having benefited in whole or in part from this my estate, I direct any such undistributed share shall NOT be redirected unto any spouse or child of such a deceased person, rather such an undistributed share shall be equally redistributed amongst the remaining SURVIVING siblings. I have not mentioned any other siblings who have already predeceased me, as this is consistent with my wishes to gift only unto surviving siblings.

[emphasis added]

The respondent applied for letters probate in Mr. Aronetz’s estate in December 2018, while Jennie Leason was still alive, and the executor of Mr. Aronetz included Ms. Leason in the list of beneficiaries of Mr. Aronetz’s estate. The executor however received the grant of letters probate in Mr. Aronetz’s estate in January 2019, after Ms. Leason had died. The executor had not distributed any part of the estate to Jennie before Jennie died.

The issue before the Court was whether the estate of Jennie Leason was a beneficiary of the estate of Donald James Aronetz.

In light of the above provision in paragraph 2 of Mr. Aronetz’s will, the executor of Mr. Aronetz’s estate took the position that Ms. Leason is no longer a beneficiary of Mr. Aronetz’s estate.

The Decision of the Court

The Court interpreted clause 2 above as providing for:

  1. a gift to vest on Aronetz’s death; and
  2. if there was a subsequent death of a beneficiary, before distribution, the gift would be divested.

The Court then turned to consider whether this testamentary intention should be enforced?

The Court held that such intention was contrary to the established legal principle that once a bequest is vested, it cannot be divested. As such, the above provision of Mr. Aronetz’s Will was not enforceable. The Court concluded as follows:

[30]         I conclude, then, that in law a testamentary direction that purports to reverse a gift that earlier had become effective is not enforceable. Put another way, a bequest once vested may not be divested.

[31]        The bequest to Jennie Leason, in Mr. Aronetz’s estate, was effective at the moment of Mr. Aronetz’s death. The gift vested – was de jure receivable – on his death. Ms. Leason’s subsequent death, before she actually received any part of the estate, does not affect the full vesting of her interest in the estate at the moment of Mr. Aronetz’s death. Mr. Aronetz’s direction that in such a circumstance Ms. Leason’s share should go to the other named beneficiaries, rather than to her estate, is not enforceable. 

As such, the Court held that the estate of Jennie Leason was indeed a beneficiary of the estate of Donald James Aronetz, and entitled to receive the gift as if the gift had in fact been distributed to Jennie during her lifetime.

Legal costs:

As an interesting aside,  the Court awarded full indemnity (dollar for dollar) legal  costs to both sides. Their full legal costs were thus payable out of the estate of Donald  Aronetz.

The Court noted the entire court application had been necessitated by the provisions of Mr. Aronetz’s will, and by no fault of the executor, nor the fault of the heirs of Jennie Leason. The Court held that it had been reasonable for the applicants to bring the application, and it was reasonable for the respondent to oppose it.

As such, Leason also serves as a reminder to ensure that a Will is carefully drafted. This will better avoid the risk that a court proceeding may be required to give effect to your Will (as such court application may dilute your estate through awards of legal costs).

 

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Kusch and Clavelle Contribute to CBA BarNotes

The most recent issue of the Canadian Bar Associations’s BarNotes contains articles by two RS lawyers.

Travis Kusch’s article “Closely Held Corporations: Avoiding the Messy Break-up”  offers practical advice to families who enter into business together.

Curtis Clavelle contributed “When Can an Employee Sue an Employer?”.  In the article he gives guidance on the scope and effect of c. 43 of The Workers’ Compensation Act.

BarNotes is published three times a year and is provided to members of CBA Saskatchewan.

 

 

Steele and Parsonson Speak on Wills and Estates

On March 5, James Steele and Ben Parsonson volunteered their time to address wills and estates issues with the residents of the Palisades Retirement Residence.

Together they spoke on the importance of having a Will, or Power of Attorney, or health care directive as well as some potential issues which may cause a Will to be challenged.

Area of ExpertiseEstate Litigation