Estate Planning with Joint Tenancy vs. Tenants in Common in Canada
Hi, WealthTrack founder David Pipe here. When it comes to estate planning in Canada, one of the most critical—yet often misunderstood—decisions involves how you own property. Specifically, whether you hold title as joint tenants or tenants in common can dramatically impact your estate, taxes, probate fees, and even family harmony after your passing.
In this article, we’ll unpack the key differences between joint tenancy and tenants in common in Canada, explain their legal and tax implications, and help you decide which option suits your estate planning goals.
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1. Understanding the Basics: Joint Tenancy vs. Tenants in Common
Joint Tenancy means that two or more people own a property together with equal shares and right of survivorship. This means if one owner passes away, their share automatically transfers to the surviving co-owner(s), without passing through probate.
Tenants in Common allows two or more people to own property in any proportion (not necessarily equal). Crucially, there is no right of survivorship. Instead, when one owner dies, their share of the property passes to their heirs, usually through their will and probate.
2. Why It Matters in Estate Planning
This distinction is critical for estate planning in Canada because it directly affects:
Who inherits the property
Whether the property is subject to probate
Potential family disputes
Tax planning opportunities
For example:
With joint tenancy, the property can avoid probate, potentially saving time and fees.
With tenants in common, you maintain full control over who inherits your share—but your estate may face probate fees and delays.
3. Probate Considerations
Many Canadians enter joint tenancy arrangements specifically to avoid probate fees, which can range from 0.5% to 1.5% of an estate’s value, depending on the province.
However, it’s not always a silver bullet:
Only the deceased's share avoids probate. Other assets may still face probate.
Probate can still be necessary in complex estates or where disputes arise.
In contrast, tenants in common does not bypass probate, since each owner's share becomes part of their estate.
4. Tax Implications: A Hidden Trap
Property ownership structures also carry capital gains tax consequences.
With Joint Tenancy:
When you add someone (like a child) as a joint tenant, you may trigger capital gains tax if the property is not your principal residence.
The Canada Revenue Agency (CRA) may see it as a deemed disposition, meaning you’ve effectively sold part of the property—even if no money changes hands.
With Tenants in Common:
Since ownership can be structured flexibly, it's often easier to plan around capital gains and minimize future taxes.
It allows for more creative estate freezes or staggered asset transfers in high-net-worth estate plans.
5. Control and Ownership Rights
Joint tenancy restricts your ability to independently control your share of the property:
You can’t sell or mortgage your share without consent from the other joint tenants.
After your death, your share automatically goes to the other joint tenant(s)—potentially cutting out intended heirs.
Tenants in common provides greater flexibility:
You can leave your share to anyone in your will.
You can sell or transfer your share independently during your lifetime.
6. Common Scenarios in Canada
Married Couples:
Most married couples choose joint tenancy for their primary home, allowing the surviving spouse to inherit without probate.
Blended Families:
In second marriages, tenants in common allows each spouse to ensure their children from prior relationships inherit their intended share.
Cottages & Vacation Homes:
Many Canadians co-own cottages with siblings or friends. Tenants in common can simplify the process if one party wants to sell their share later.
Real Estate Investors:
Investors typically prefer tenants in common to allocate ownership percentages, tax planning, and future flexibility.
7. Legal Complexity & Family Risks
It’s common for parents to add adult children as joint tenants to “make things easier.” However, this can backfire:
The property becomes vulnerable to the child’s creditors or divorce settlements.
The child may disagree with future decisions about the property.
Unintended tax liabilities may arise.
For larger estates, formal trusts or a combination of ownership structures may be safer and more flexible.
8. Switching Between Ownership Types
Changing from joint tenancy to tenants in common (or vice versa) requires formal legal steps:
A new deed of ownership must be registered with your provincial land registry.
In some cases, you’ll need legal advice to avoid unintended tax consequences.
Never make these changes without consulting an estate lawyer or notary.
9. Final Thoughts: Choosing the Right Option
There’s no one-size-fits-all answer when it comes to joint tenancy vs. tenants in common in Canadian estate planning.
✔️ Choose joint tenancy if:
You want to simplify transfers to a spouse.
You are comfortable giving up flexibility in favour of probate avoidance.
✔️ Choose tenants in common if:
You want full control over inheritance of your share.
You’re co-owning property with others outside your immediate family.
You’re engaged in detailed tax or estate planning.
Key Takeaway: Always consult an estate lawyer or tax advisor before making changes. A decision made today could have serious consequences for your estate—and your heirs—tomorrow.
