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Estate Planning For Your ‘Home Sweet Home’


home-sweet-homeRecent statistics reveal that Ottawa continues to enjoy a healthy real estate market. Home sales in August were up 6.6% over last August. For most of us, our home is our most valuable asset.  Makes sense that it should be carefully considered when doing estate planning. This is particularly true for couples.

Many of the couples I meet with at my law office in the Kanata-Stittsville area of Ottawa are not aware that there are essentially two ways a couple might hold title to their home. Each has very different consequences upon the death of an owner:

• As ‘joint tenants’, if one of the owners dies, title passes directly to the surviving owner by ‘right of survivorship’. In other words, the deceased owner’s share does not become part of his or her estate and no estate administration tax (or probate fees) are payable on that share.

• If title is held as ‘tenants in common’, upon the death of one of the owners, his or her share of the home passes into his or her estate, is distributed according to the terms and conditions of his or her Will, and the value of the deceased owner’s share is subject to estate administration tax.

Under a tenants in common scenario, owners may not necessarily have equal ownership. For example, one owner could have a 75% share and the other a 25% share.

I tell couples I meet that they should consider the various results that could happen depending upon the order of death and how they hold title at the time.

Bob and Linda are common law spouses who each have children from prior relationships. They are purchasing their first home together and are not sure how to take title.  Let’s look at how the order of death and type of ownership changes things.  We’ll assume that both Bob and Linda have Wills.  If there is no Will, Ontario’s intestacy laws determine the distribution of a person’s estate on death.

If Linda dies first:
If they own as joint tenants – Linda’s share of the home goes to Bob and, on his death, will be distributed according to his Will (which might not include Linda’s children).  The terms of Linda’s Will are irrelevant.
If they own as tenants in common – Linda’s share of in the home goes to her estate and will be distributed according to the terms of her Will.

If Bob dies first:
If they own as joint tenants – Bob’s share of the home goes directly to Linda and, on her death, will be distributed according to her Will (which might not include Bob’s children).  The terms of Bob’s Will are irrelevant.
If they own as tenants in common – Bob’s share of the house goes into his estate and will be distributed according to the terms of his Will.

As you can see, how a couple holds title has direct and important consequences as to how each of their estates are ultimately distributed. I advise couples not to make any decisions or any changes to the title of real property without first considering the effect on their estates. Revisions to one or both of their Wills may be necessary depending upon what they decide.

Are you purchasing a home and not sure whether you should own as joint tenants or tenants in common? Have you already purchased a home and want to know if how you own makes sense for your situation? Call 613.836.9915 or email to make an appointment to meet with me at our Ottawa office. We will review your unique situation and estate planning goals to make sure your share of ‘home sweet home’ ultimately ends up where you intend.

Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.

Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.

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