Joint tenant with right of survivorship: opportunities & risks

Published June 21, 2024
 A couple sitting and reviewing information on a laptop and in a notebook..

Joint accounts may present opportunities to achieve your estate and overall financial goals, however, there can also be significant risks that should be considered. We'll outline some of the key features of joint accounts below to help you make an informed decision about whether these accounts are right for you.1

Legal vs beneficial ownership

Before we explore the ins and outs of joint accounts, it's important to clarify what we mean by "ownership". Many people don't realize that assets may have different "legal owners" than "beneficial owners". Simply because someone's name appears on an account, doesn't necessarily mean they also have the right to use, enjoy, or personally benefit from the investments in the account. They may be a "legal owner" but not have a beneficial interest in the account's assets.

This is a critical point to understand when we think about joint accounts. It may help to think of the concept using a more familiar example, like trusts. With a trust, the Trustee (the legal owner) holds the trust assets for the benefit of the beneficiaries (the beneficial owners). The Trustee has the right to sign documents and make decisions about the property, but unless they are also a beneficiary, they would not have any right to use the property for their own benefit. Similarly, while the beneficiary of a trust may have a right to use and enjoy the trust assets, they may not have the right to make decisions about the trust property or sign a contract on behalf of the trust. The separation of legal and beneficial ownership is well understood when it comes to trusts. Unfortunately, many people don't realize this concept of legal and beneficial ownership may also apply to other property, like investment assets or real estate.

When individuals decide to create a joint account, it's critical that each joint owner understands exactly what the nature of that relationship will be.

Joint Tenant with Right of Survivorship (JTWROS)

With a JTWROS account, each person named on the account is a legal owner. The owners can require that decisions must be made unanimously or by majority but unless otherwise specified, each named individual will generally have the authority to give instructions or transact on the account. On the death of a joint tenant, his or her legal ownership ceases and the remaining account holder(s) continues to have legal authority to deal with the account. Does that mean the surviving account holder(s) also becomes the beneficial owner of the assets in the account? Not necessarily.

A beneficial right of survivorship generally exists where the joint owners are spouses or common- law partners. In that case, when one of the owners dies, the surviving owner typically becomes the sole legal and beneficial owner of the assets in the account by operation of law without any of the assets passing through the deceased owner’s estate.

In contrast, when a parent puts his or her assets into joint names with an adult child, the law presumes there is no beneficial right of survivorship. Unless the adult child can prove that the parent intended for the assets in the account to pass to them on the parent’s death, the assets are held in trust for the parent’s estate. This means that even if the financial institution recognizes the child as the legal owner of the account and transfers the funds to him or her, the assets are not his or hers to do with as they please. Instead they are held by him or her in trust for the parent’s estate and must generally be distributed according to the parent’s Will or, if there is no Will, under the province’s intestacy rules.


Probate avoidance (or merely delay?)
Avoiding the probate process and saving probate taxes on the value of the account is often a significant motivation in establishing joint accounts. Where a beneficial right of survivorship is created, the assets in the account will generally pass outside the person's estate to the surviving owner. Since in many provinces probate tax is charged on the fair market value of the assets passing through an estate, a joint account can potentially result in probate tax savings. Depending on the value of the account assets, this savings can be significant in provinces such as Ontario, British Columbia, and Nova Scotia where probate tax rates are relatively high.

Where a beneficial right of survivorship has not been created (such as where an adult child has been added to the account for convenience purposes only), it is not always clear that probate can be avoided. If probate is required in order to deal with other estate assets, depending on the specific rules of your province, an asset that is held in trust for the estate by the surviving account holder may need to be included in the value of the estate for probate tax calculation purposes. Your lawyer can advise you about the applicable rules in your province.

You should always keep in mind that probate tax rates are much lower than income tax rates. They're also nowhere near the potential legal and court fees that could result where intentions are not made clear and litigation results. While reducing probate tax can be a relevant estate planning consideration, it generally does not make sense to pursue it at the expense of more important estate planning goals or if the required strategies raise undue risks.


The risks associated with joint accounts can be numerous and should be carefully considered with your tax and legal advisors before deciding to open a joint account. They may include the following:

  • Loss of control: When a person changes a solely owned account into a joint account, they lose control over the assets in the account. The other owner can now add to, or withdraw from, the account, possibly without the original owner’s knowledge or approval.
  • Loss of certainty: Depending on how the JTWROS relationship is established, it may be possible for any owner to sever the JTWROS relationship and instead create a Joint Tenants in Common (JTC) relationship. This may happen unilaterally at the direction of one owner and without the consent of all owners. Where a JTC relationship is created, a right of survivorship does not exist, and the joint owner may leave their interest in the asset to someone other than the surviving joint owner.
  • Income tax: The creation of a joint account from a solely owned account may give rise to several income tax consequences. For example, where a parent has added an adult child as a joint owner of an investment account, the parent may be viewed as having gifted half of the account to the adult child. If that’s the case, the Canada Revenue Agency will apply rules that will treat the transfer as a sale of half the investments in the account. To the extent the deemed sale results in a capital gain, the parent would be subject to tax on that value. In the case of a joint account with a spouse or common-law partner, tax would not generally be triggered due to the rollover rules, however, income attribution rules may be triggered, which would prevent income splitting with the spouse or common-law partner who has been added as a joint owner. Some people mistakenly believe that by putting a spouse’s name on an account they can each report half the income on their tax returns. While the rules are complex, the general rule is that income must be reported proportionate to each individual’s contribution.
  • Creditor claims: Where a parent makes a solely owned account into a joint account with an adult child or other family member, such as a grandchild, it may expose the assets in the account to potential creditor claims relating to that family member. That may include family law claims relating to the division of assets in the event the family member’s marriage subsequently comes to an end.
  • Loss of legal protections in event of relationship breakdown: Depending on the laws of your province, and the specific terms of any co-habitation or marriage contracts between spouses, certain assets may be protected from division in the event of relationship breakdown. If those assets are “comingled” or transferred into joint names with a spouse, those legal protections may be lost.
  • Estate disputes: A common issue in estate disputes, including those that end up in court, is whether a joint account owned by a parent and adult child passes on the parent’s death to the surviving child by right of survivorship or is held in trust by the surviving child for the parent’s estate. The surviving adult child account owner may take the position that the account assets pass by right of survivorship, while the deceased parent’s other children may believe the account assets should be held by the surviving owner in trust and distributed based on the deceased parent’s Will, especially if the Will names all the children as equal beneficiaries. Such legal disputes can be incredibly costly, both financially and in terms of damaged relationships, and may cause lengthy delays to the estate administration. It highlights the importance of clearly documenting the parent’s intention at the time a joint account is established.

Benefit-cost analysis

If you are considering whether to put assets into joint accounts with your spouse, adult children or other family members, you should consult with your tax and legal advisors to fully understand the potential opportunities and risks that relate to your specific situation. In some cases, joint accounts can be an effective estate planning and broader financial strategy, but they typically carry risks that may be significant. If the risks of joint accounts outweigh the benefits for you, consider exploring alternative strategies with your tax and legal advisors.

Talk with your Edward Jones financial advisor to make sure your strategy stays on track to meet your long-term financial goals.

Important Information:

1 Joint tenancy is not recognized under the law of the Province of Quebec, and therefore accounts for Quebec resident clients cannot be held in joint tenancy with right of survivorship.

This article does not and is not intended to provide tax or legal advice. The rights and responsibilities of legal and beneficial owners are complex and may vary depending on whether the terms are being used for questions of property law, tax law, trust law, or family law. This article is intended only to give readers a broad overview of the complexity involved. Individuals should seek advice from their tax and legal advisors for their specific situation.