Dunnison Estate: Joint Tenancy as a Tool for Estate Planning

This comment discusses the risk of using joint tenancy as an estate planning tool considering the recent Saskatchewan Court of Appeal decision, Dunnison Estate.

There are many reasons why a person might want to transfer legal title to property, including: for asset management, estate simplification, or for donative purposes. The Supreme Court of Canada (“SCC”) has repeatedly found in favour of a presumption of a resulting trust for property that is gratuitously transferred property.1 However, the Saskatchewan Court of Appeal in Dunnison Estate v. Dunnison2 ruled that the presumption is inapplicable to gratuitous transfers of land in Saskatchewan.3 This “seminal decision”4 by the Court serves as a cautionary tale for individuals using joint tenancy either as a method of receiving help managing their assets or as a method of estate simplification.

The intention of the transferor when gratuitously transferring property determines whether the transferred property is being held in trust or as a gift.5 Classification of the intention behind a gratuitous transfer can have a profound impact on an individual’s estate. If the property is found to be held in trust by the transferee, it will revert to the transferor’s estate and be distributed according to the transferor’s will.6 If the intention of the transferor is found to be donative, then the transferee will hold an absolute interest in the transferred property.7

In Dunnison Estate, Ms. Dunnison had transferred title to a family cottage into joint tenancy with a right of survivorship to herself and her two sons, Douglas and Raymond.8 Before Ms. Dunnison died, a dispute had arisen between herself and Raymond that led her to demand Raymond transfer his interest in the property back to her.9 He did not, and so Ms. Dunnison decided to change her will to explicitly state that the property had only been transferred into her sons’ names for estate simplification purposes, and it was not her intention that either son would have any beneficial interest in the property.10 After Ms. Dunnison died, Douglas, as executor of her estate, brought an application to the Saskatchewan Court of Queen’s Bench to determine whether the family cottage was held by Douglas and Raymond in trust for their mother’s estate, or whether it had been a gift.11 Douglas was unable to provide sufficient evidence to prove that his mother did not intend a gift at the time of transfer, and the Court of Appeal agreed with the Chambers judge that the family cottage did not revert to Ms. Dunnison’s estate.12

The Court of Appeal found that the presumption of a resulting trust had not been considered by the SCC in light of the specific land titles registration legislation in Saskatchewan.13 The Court looked to the legislative history of the land titles registration system and found that the purpose of the legislation was to simplify the process of verifying the authenticity of a land owner’s title.14 The presumption of a resulting trust was found to be contrary to the purpose of the land titles registration legislation.15 The presumption shifts the evidentiary burden to the transferee to establish that the transferor intended an absolute transfer of title,16 whereas the legislation states that the effect of a transfer is an absolute transfer of title unless a contrary intention is expressed.17 The Court thus held that the presumption of a resulting trust is inapplicable with respect to gratuitous transfers of land in Saskatchewan.18

The SCC noted in Pecore v. Pecore19 that the intention behind gratuitous title transfers can be for estate simplification purposes or to avoid probate fees.20 In such a scenario, the transferor intends for the beneficial interest to eventually go to the transferee. However, especially regarding transfers between elderly parents and their adult children, the transferor may transfer title with the intention of retaining the beneficial interest in the property.21

The justification behind the presumption of a resulting trust stems from the idea that equity presumes a bargain and not a gift.22 As such, when property is gratuitously transferred, it is presumed that the transferee holds the property in trust for the transferor. In disputes where the transferor is deceased, the presumption provides a measure of predictability in the law.23 Additionally, the transferee is in a better position than a potential beneficiary to show evidence of the transferor’s intent.24

Without the presumption of a resulting trust, the onus falls on the challenging party to prove, on a balance of probabilities, that the transferor did not intend to transfer the property as a gift at the time the property was transferred.25 Evidence of subsequent behaviour, such as an explicit statement in a will that the transfer was not intended to be a gift, can be relevant in determining the transferor’s intent.26 However, the weight of such evidence could be negligible, as the subsequent behaviour might be self-serving or reflect a change in the transferor’s original intent.27 A trust instrument made at the time of transfer, or a transfer without a right of survivorship, would best indicate that the transferor did not intend a gift.28

The decision in Dunnison Estate shows that individuals must be cautious when using joint tenancy as an estate planning instrument. Express trusts can still be made with respect to land in Saskatchewan,29 and voluntary transfer resulting trusts are still possible even in the current statutory context.30 For individuals who may wish to transfer property for help with managing financial affairs, clear documentation of this intent at the moment of the transfer should be encouraged.31 Additionally, such a transfer should not include a right of survivorship for the transferee.32 Failure to adequately declare the intention to create a trust will likely lead to the conclusion that the transferred property was intended to be a gift.

Individuals who plan to use joint tenancy to avoid probate fees or for estate simplification purposes should be warned that the transfer of title will be irreversible. The transferor will not be able to unilaterally reclaim the transferred title, even if there is a subsequent dispute between the transferor and the transferee. Dunnison Estate strongly suggests that merely stating a contrary intention in a testamentary document made after a transfer of title will not be enough to reverse the transfer of title.33

Devising land through a will should be encouraged for individuals who are concerned that they may change their minds over who they want to benefit. If land is only devised through a will and not through an inter vivos transfer of title, a testator can freely change who he or she wishes to benefit as long as he or she is still living and has capacity.34 The property is not vested in the beneficiary until the testator has died,35 so the beneficiary has no legal claim to the property if the testator chooses to change his or her will. If Ms. Dunnison had not transferred the title to the family cottage into joint tenancy, she could have prevented Raymond from receiving any title to the cottage by altering her will. Dunnison Estate has clarified that it is near impossible to reclaim land that has been transferred into joint tenancy in Saskatchewan. Individuals who are considering pursuing joint tenancy as a method of estate planning should be warned of this risk and be advised of the options available.

* JD Candidate (University of Saskatchewan). Any errors are mine.

1 See Pecore v Pecore, 2007 SCC 17, [2007] 1 SCR 795 [Pecore] (the presumption of a resulting trust was held to apply to a gratuitous transfer of assets from a parent to an adult child at paras 34-36). See also Madesen Estate v Saylor, 2007 SCC 18 at para 17, [2007] 1 SCR 838; Kerr v Baranow, 2011 SCC 10 at paras 19-20, [2011] 1 SCR 269; Nishi v Rascal Trucking Ltd., 2013 SCC 33 at para 29, [2013] 2 SCR 438.

2 2017 SKCA 40, [2017] 8 WWR 18 [Dunnison Estate].

3 Ibid at para 94.

4 Mosiuk v Nagel’s Debt Review Inc., 2017 SKQB 173 at para 75, 79 RPR (5th) 44.

5 Pecore, supra note 1 at para 5.

6 Ibid at para 53.

7 Ibid.

8 Supra note 2 at para 5.

9 Ibid at para 7.

10 Ibid at para 8.

11 Ibid at para 2.

12 Ibid at paras 114-22.

13 Ibid at para 31. The relevant legislation to the case was The Land Titles Act (RSS 1978, c L-5 [1978 Act]) because of the date of the original transfer of title between Ms. Dunnison and her two sons, but the analysis the Court engaged in is equally applicable to The Land Titles Act, 2000 (SS 2000, c L-5.1 [2000 Act]), which has since replaced the earlier act (Dunnison Estate, supra note 2 at para 68).

14 Dunnison Estate, supra note 2 at paras 72-75.

15 Ibid at para 87.

16 Ibid at para 86.

17 1978 Act, supra note 13, ss 90(1), 213(1); 2000 Act, supra note 13, s 47(1).

18 Dunnison Estate, supra note 2 at para 123.

19 Pecore, supra note 1.

20 Ibid at para 47. To transfer property from an estate to the beneficiary in Saskatchewan, the will must be probated. If the property is held in joint tenancy with a right of survivorship, then only a certification of death is needed to transfer the property to the surviving title holder (Information Services Corporation, “Transfer Land Ownership”, online: <https://www.isc.ca/LandTitles/Transfer/Pages/default.aspx>, archived: <https://perma.cc/2D7E-9JSB>). The application for probate costs $7 per $1,000 of the estate (The Administration of Estates Act, SS 1998, c A-4.1, s 51(2)), whereas ordering a death certificate costs between $35 and $55 (eHealth Saskatchewan, “Order a Death Certificate”, online: <https://www.ehealthsask.ca/residents/deaths/Pages/Order-a-Death-Certificate.aspx>, archived: <https://perma.cc/5W4Z-SAT9>).

21 Pecore, supra note 1 at para 36.

22 Ibid at para 24.

23 Ibid at para 23.

24 Ibid at para 26.

25 Dunnison Estate, supra note 2 at para 111.

26 Pecore, supra note 1 at para 59.

27 Ibid.

28 Dunnison Estate, supra note 2 at para 114.

29 Ibid at para 105.

30 Ibid at para 114.

31 Ibid.

32 Ibid.

33 Ibid at para 116.

34 The Wills Act, 1996, SS 1996, c W-14.1, s 11.

35 Ibid, s 24.

Share this story