A convenient tool used for estate planning is to put property
into jointure. In our blog, we have written about
joint tenancies before. Joint tenancies are often seen between
spouses, and as part of an estate plan, as between a parent and
their adult child. However, because of the increasing cost of
real estate in Vancouver, more and more baby boomers are using the
equity in their homes to assist their children in purchasing their
own home, while at the same time, giving the parent peace of mind
that they themselves will be taken care of as they age.
Take the situation where mom who is widowed owns her own home
without a mortgage. Her son is in his late 20's and married
with a new baby. Son can't afford to purchase a home, and lives
in a rented condo. Mom therefore offers to sell her home and
purchase a fixer upper for herself and her son and his family. Son
and his wife put their own money into renovating the home and
making separate suites for mom and their family. Mother has peace
of mind that she will be close to family as she ages and son has
the ability to become a property owner.
The above type of scenario is not uncommon in many cultures but
until recently, has not been the norm for western cultures.
However, this type of arrangement is on the rise, more out of
economic necessity than cultural imperative. Read about this in a
recent article in the Vancouver Sun:
As far as estate planning is considered, the above arrangement
can be convenient and economical, but is not without its
difficulties. If the relationship(s) become strained, it may be
difficult to disentangle the financial contributions of each family
member. In addition, the mom's hopes of being close to family
while she ages may become impossible and new arrangements will have
to be made. If there is more than one child, but only one child is
a joint tenant with the parent, tensions may arise between
siblings. While it may be uncomfortable, we recommend that
such family arrangements be thought through carefully and, if
necessary, a contract be entered to reflect each person's
expectations, rights, and obligations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
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