After someone passes away, the estate trustee will often apply for a certificate of appointment of estate trustee. While it is not technically mandatory to apply for the certificate of appointment in order to administer the estate, it is often a practical requirement in order to deal with certain types of assets.
Applying for the certificate triggers the requirement to pay estate administration tax on the assets of the Estate.
Even where it will be practically necessary for the estate trustee to apply for the certificate in order to administer the estate, there are certain ways you can structure your affairs to minimize the estate administration tax that will be payable.
One such strategy is holding assets jointly with others. For example, if legal title to real property is held in joint tenancy by the deceased and another, title will pass to the surviving joint tenant by right of survivorship and no estate administration tax will be payable.1
In contrast, real property that is held jointly, but as tenants in common, will pass through the estate and will be subject to estate administration tax.
But what happens when two parties intended to take title to a property as joint tenants, but title was mistakenly registered in their names as tenants in common? Is there a way to rectify title to avoid the estate administration tax?2
Section 160 of the Land Titles Act gives the court the authority to make an order for the rectification of the register if satisfied of the justice of the case.
Justice I.F. Leach and Justice Vermette dealt with this very issue and the evidence necessary to satisfy the court that “the justice of the case” warrants an order rectifying the register in Hardy v. Estate of Louise Winters Hardy and Hong v. Hong et al. respectively.
In both cases, the court relied on the following grounds:
- The uncontradicted evidence indicates and confirms that the relevant parties intended to take title as joint tenants and instructed their solicitors accordingly;
- In Hardy, the court found that the transferor inherently had no interest in how the transferees would have taken title while in Hong, Vermette J. noted that the transferor gave evidence confirming that the applicant and the deceased intended to take title to the property as joint tenants; and
- There was no indication that a retroactive amendment of the relevant register entry would prejudice or potentially prejudice anyone without their consent. More specifically, the potential beneficiaries of the estate consented to the relief requested.
Both cases establish that if satisfied that the justice of the case warrants an order for rectification – such as in cases where the parties gave instructions to their lawyer to take title as joint tenants, but title was mistakenly registered in their names as tenants in common – the court may make an order that the register be rectified pursuant to section 160 of the Land Titles Act.
- Whether this type of strategy is right for any particular individual depends on their circumstances and transferring title of real property into joint tenancy can trigger unwanted tax or other consequences. We recommend that you consult with your accountant and or lawyer to determine whether this strategy is appropriate for you. ↵
- Whether this approach is practical will depend on the circumstances of each individual case. ↵