Joint Tenancy as an Estate Planning Tool

What are the pros and cons, risks and benefits to adding an adult child to title to your home?

Joint ownership is an effective way to transfer property on death. In fact, from an estate planning perspective, it is the most effective way to transfer property on death, as assets which are jointly owned are not considered to be assets of the estate and are therefore not subject to probate fees. Efficiency and the desire to avoid probate causes many people to consider adding an adult child to title to property; however, doing so comes with a host of other risks which, in the end, might outweigh the benefits.

Joint Tenancy as an Estate Planning Tool

In an earlier blog, we described two types of ownership structure: joint tenancy and tenancy-in-common [link to Ownership Structures blog article]. To summarize, joint tenancy is a form of ownership where two or more people own the entire property together. The defining feature of a joint tenancy is the right of survivorship. A right of survivorship means that, by operation of law, if one of the joint owners dies, the other owner (or owners) becomes the owner of the whole property. A tenancy-in-common is a fractional form of ownership with no right of survivorship. If a tenant-in-common dies, his interest in the property will pass to his estate and be distributed in accordance with the terms of his will.

Spouses often own property as joint tenants so that, upon the death of the first spouse, the second spouse will become the owner of the property by right of survivorship. Where an interest in property passes by right of survivorship, a probate order is not required which means that the estate will not be required to pay probate fees (which, at present, are assessed at 1.4% of the value of the estate). The time- and cost-effectiveness of joint ownership may, at first glance, appear appealing. However, there are several disadvantages to owning property jointly which likely outweigh the advantages. A few of those disadvantages are described below.

1.      Loss of Autonomy

If a person owns an asset solely, he or she can re-finance or sell the asset without the input of anyone else. This control and flexibility is lost when an asset is owned jointly as the joint owner will now also need to agree to and sign on to any changes.

2.      Exposure

When you add a child to title, you are changing legal ownership and this change is reflected at the Land Titles office. If the child becomes embroiled in legal proceedings – because of creditors, divorce or other cause – the property may also become involved in those proceedings as an asset of the party.

3.      Other Costs

Capital gains tax is another important factor in the disadvantages of joint ownership. It is unusual for the child who is being added to title to in fact occupy the home as his or her principal residence and, accordingly, when the property is sold, the child will not have a principal residence exemption available and will likely be required to pay capital gains taxes on the increase in value of the property. Additionally, a concern for the client who is considering adding a child to title is that the CRA may challenge the client’s own principal residence exemption claimed over the entire property on sale or the client’s death.

Property Transfer Tax may also be payable if a person is transferring an asset that does not meet the definition of “principal residence” or is transferring to a person who does not meet the definition of “related individual.”  

4.      Use of a Trust

The solution to protecting the owner of the property from the potential exposures to liability identified above  for many years was the creation of a trust. Documenting the transfer properly, with an accompanying document called a bare trust or trust declaration, allows you to transfer legal title and transfer the right of survivorship but retain beneficial interest (that is, control) of the asset while you are still alive. This method limited the parent’s exposure to the concerns identified above, and also provided evidence of the parent’s intention --  whether the right of survivorship is a gift to the child who also holds the legal title, or whether that child is required distribute the value of the asset amongst other beneficiaries of the estate (such as other children).

5.      Administrative Considerations

In recent years, new federal and provincial regulations require increased reporting of property ownership and trusts, which has significantly complicated the trust and transfer estate planning strategy, causing it to lose its appeal for many people.

Some of the administrative considerations that you need to consider are as follows:

a)      Land Owner Transparency Registry (LOTR): Any separation of legal and beneficial ownership, such as a trust, requires disclosure under the provincial Land Owner Transparency Act. These filings create a record of legal and beneficial ownership and must be kept up to date any time land titles change hands. Non-compliance carries the risk of significant penalty.

b)      Federal Trust Reporting (T3 Return and Schedule 15): Since 2023, the CRA has twice introduced bare trust reporting requirements, which will be mandatory for most trusts, including bare trusts, on an annual basis, even if no income is earned. Both times after introducing this legislation, the federal government has, at the last minute, decided to delay its implementation, leaving lawyers, accountants and property owners without any clear guidance on what the trust reporting is going to involve and when.

Striking a Balance

In the end, taking into account all the potential risks, many people decide that paying the probate fee of 1.4% is a more desirable result than transferring the property into joint tenancy.

Benjamin Franklin advised Philadelphians in regard to the great fires of 1736 that “an ounce of prevention is worth a pound of cure.” This also rings true in estate planning. Ensure that you receive sound legal advice and properly document your wishes prior to your death in order to prevent ambiguity in your estate-planning documents, in order to avoid unexpected fees and taxes, and in order to ensure that the planning you have done can be carried out seamlessly after your death.

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Written by Emily Anderson, Albert & Co. Law LLP, February 2026.

© Albert & Co Law. The contents of this article do not constitute legal advice. Readers should seek legal advice in relation to their own specific circumstances.