According to the sort of estate planning advice that gets
dispensed over back yard fences and in gym locker rooms,
transferring property into joint tenancy with children is
the easy way to accomplish a number of things –
often avoiding probate fees, and sometimes a desire to leave a
particular property to a child outside of the will.
Unfortunately joint transfers are also an easy way to
set up your estate for a nasty public fight that will destroy
relationships over a period of months or years. The recent case
of Harshenin v. Khadikin is only one
example in a long line of cases that involve essentially similar
facts. In short:
The parent goes to a broker, investment manager or
banker (for bank or investment accounts) or to a lawyer or
notary (for real estate) and gives instructions for a transfer to
joint tenancy with a child.
The parent does not prepare a clear document stating their
intention in making the transfer.
Why is the statement of intention crucial when making a
joint transfer? Because the way the law has developed in this area,
a transfer of property to joint tenancy is an inherently ambiguous
act. In making such a transfer your intention might be one of
three things: (a) to immediately gift of a part of the
property, making the recipient an equal owner with you, (b)
to transfer title only, leaving you as the beneficial owner
and making the recipient a mere nominee for you
and your estate, or (c) to pass no beneficial interest
now but to allow the recipient to take the property as
survivor on your death. Each of these three possibilities will
lead to different consequences on your death in terms of
the passing of the property and income tax
considerations. Without a statement saying which one of those
you intend, you leave it to your surviving family members and the
courts to resolve.
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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