Did These Separated Spouses Intend to Change Title to their Matrimonial Home?
The question in a recent Ontario case called Hansen Estate v. Hansen was whether the husband and wife had engaged in a “course of dealing” that established that their joint tenancy in the matrimonial home was severed, so that they became tenants-in-common. (And the question of whether the husband’s daughters could inherit his share of the matrimonial home hung in the balance).
The two spouses owned the matrimonial home as joint tenants: this meant that if either of them died, the other would obtain the right to exclusively own the home – a concept known as the “right of survivorship” under the law of joint tenancy.
On the date of the husband’s death, however, he and his wife were legally separated, and were in the process of dividing up their matrimonial assets. His Will, which had been drawn up slightly before his death, provided that his entire estate would be left to his four daughters from a previous marriage.
The problem was that his estate consisting mainly of the matrimonial home, the entirety of which the wife would inherit through her right of survivorship. (In law, the right of survivorship takes precedence over any disposition in a joint tenant’s will).
Two of the daughters went to court to claim that although title to the matrimonial home was jointly held, the conduct by the now-separated husband and wife immediately before his death showed that they intended to sever that joint tenancy and create a tenancy in common instead. This would mean that, under the law relating to that style of title ownership, one-half of the matrimonial home would become part of the estate and available to be distributed under the Will.
The Ontario Court of Appeal agreed with the daughters. It said the “time-honoured test” for determining whether a joint tenancy was intended to be severed was to see whether there was a “course of dealing to intimate that the interests of the parties were mutually treated as constituting a tenancy in common.”
In this case, the conduct the Court cited to support a mutual change to a tenancy in common included:
• The wife moving out of the home and rented accommodation elsewhere,
• The husband taking over payment of the expenses, and his putting the bills in his own name,
• The locks being changed on the home,
• The husband making a new will that named his children (rather than the wife) as beneficiaries (and the matrimonial home was his only significant asset),
• The husband and wife closing their joint bank accounts, and each opening a separate account,
• Both of them retaining their own lawyers,
• Both of them agreeing to exchange financial information to carry out their property division.
The wife had also offered that the husband could “buy out” her interest in the home; the husband did not object to her suggestion that it would otherwise need to be sold.
Here, there admittedly was no explicit agreement between the husband and wife at separation to sever the joint tenancy. However, in light of the course of dealing between the spouses – and taking into account the matrimonial context – there was evidence that this was what they intended.
Therefore, rather than the full ownership going to the wife, the court ruled that one-half of the interest in the matrimonial home was part of the husband’s estate, and available to the daughters as beneficiaries.
What is the lesson to be learned? If separated spouses truly intend to sever their joint tenancy, they may want to enter into an interim agreement to this effect. Alternatively, they may want to change the manner in which they hold title: they can arrange for a registered transfer to themselves, but as tenants in common rather than joint tenants.
Similarly, future spouses who are considering getting married may want to enter into a cohabitation agreement which includes a provision that if the relationship breaks down, title held jointly is automatically severed.
For the full text of the decision, see:
Hansen Estate v. Hansen, 2012 ONCA 112 http://canlii.ca/t/fq6xz
At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.
