In Ontario, when spouses hold assets separately rather than jointly, their estate requires two separate probate applications – one for each spouse’s estate. This doubles both the legal fees and the Estate Administration Tax (EAT) owed.
Why Joint Ownership Matters
Joint ownership with right of survivorship means that when one spouse dies, the surviving spouse automatically inherits the jointly-held asset – no probate needed for that transfer. Assets that can be jointly held include:
- Real estate (registered as joint tenants)
- Bank accounts
- Vehicles
- Investment accounts
If all assets are jointly owned and one spouse dies, everything passes automatically to the survivor. Only one probate application is then needed for the estate of the last surviving spouse. For this reason, we always suggest that parents have joint ownership of real estate, bank accounts, and other assets, as long as they find each other trustworthy.
By joint ownership, I mean those that come with the right of survivorship. This means that if mom passes away first, then dad automatically gets full ownership of their jointly owned real estate, bank accounts, vehicles, etc. Of course, Mom would need to be okay with Dad inheriting everything this way. The same applies if dad passes before mom. Then mom would automatically get everything if all assets were jointly held.
What Happens When Assets Are Held Separately
If spouses hold assets in their own names, each estate is legally separate. When both spouses die around the same time – whether from an accident or natural causes – the beneficiary must apply for probate twice: once for the mother’s estate, once for the father’s.
Here is a real case example. Tory’s parents passed away at around the same time. Because they held separate titles to real estate and bank accounts, Tory had to do 2 probate applications and pay for estate taxes twice. I am unsure why Tory’s parents decided to have separate ownership of their real estate and bank accounts. As I’ve never met them before, I don’t know whether this setup was intentional or accidental. It would really make me sad if it were done accidentally due to a lack of legal knowledge.
This means that, in order for Tory to get both of his parents’ assets (he was named as their sole beneficiary in their Wills), we had to apply for probate twice! We have to apply for his mom’s probate AND his dad’s probate. Also, he needs to pay the 1.5% estate administration taxes (“EAT”) – twice! Each probate application requires the payment of EAT upfront.
In contrast, if his parents’ assets were jointly held, Tory would need only 1 probate application and 1 payment of EAT. This means that with the death certificate, his parents’ assets would first transfer to one parent (the last to pass). Then, we would probate that parent’s estate, and Tory would inherit everything.
I hope Tony’s story can encourage parents to set up assets as jointly owned, unless there is a specific reason not to. Sure, if you don’t want those assets to go to your spouse after you pass, then don’t do joint ownership. But please don’t go with sole ownership just because you haven’t thought this through or just chose randomly. In the end, this will result in much greater costs and hardship for the beneficiaries.
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