The Ontario Wills and Estates Law Blog

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Planning for ‘Home Sweet Home’

In a recent video posted to the Financial Post, Phil Soper, president of Royal Lepage, explained why he believes Ottawa is currently Canada’s hottest real estate market. For most of us, our home is our most valuable asset. So, it makes sense that it should be carefully considered when doing estate planning. This is particularly true for couples.

Many people 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.

Couples need to consider the various results that could happen depending upon the order of death and how they hold title at the time. How a couple holds title has direct and important consequences as to how each of their estates are ultimately distributed. We 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? Before making any decisions, there are numerous issues to consider such as family law issues and exposure to creditors (especially if a spouse owns a business), just to name a couple. Be sure to consult with a lawyer with experience in estate planning about your ‘home sweet home’ whether you are looking to buy or already living in your dream home.

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