Disclaimer: This article discusses estate planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

We have spoken before to elderly parents about adding their adult children to their joint accounts and their investments. We know you want to avoid paying estate tax, avoid probate, or want to simplify the process for your loved ones. 

However, should you put your adult child’s name on the title of your home? If you are the adult child, should you agree to be added to your parent’s property? On the surface, this seems like a straightforward solution, but the reality is far more complex. Significant legal and financial risks could turn this seemingly simple step into a costly mistake.

This article will talk about the risks involved. However, we encourage you to speak to our team of estate law lawyers to create an estate plan that works for you and your family. 

Should I add my child’s name on title to my house?

In Ontario, transferring or adding someone to a land title is not as simple as it may seem. Below, we explore some of the key risks involved.

Changing a house title in Ontario – knowing the risks

In Ontario, a title change is not as simple as it may seem. Below, we explore some of the key risks involved in adding your child’s name to title.

How Your Child’s Life Changes Impact Title

One of the most significant risks arises from the fact that your child’s circumstances can change unexpectedly, and these changes can directly impact your home. Once your child’s name is on the title, they are legally recognized as a co-owner of the property. This means that their personal and financial situations—such as marital issues, debts, or legal troubles—can have serious implications for your home.

Imagine that you add your son to the title. A few years later, he faces a divorce, and his spouse claims that the home should be considered a matrimonial asset. Under Ontario’s Family Law Act, the property could be subject to division, meaning that your son’s ex-spouse could have a claim to a portion of your home. 

Similarly, if your child incurs significant debt, their creditors may turn their attention to the property. Creditors could take action to recover what is owed. 

Removing their name could be costly 

What if your circumstances change, and you decide to remove your child’s name from the title? Unfortunately, removing a name from the title is not straightforward, and it can involve more than just a simple paperwork adjustment.

When a name is added to a title, the law recognizes the new owner’s legal rights to the property. This means that, once added, the co-owner typically must sign off and agree to these sorts of changes. If they refuse, you could find yourself in a difficult legal position.

Family disputes and broken promises

Adding one child to the your home’s title can create expectations and promises that may not be honored after your death. Even if your child agrees to divide the property fairly with their siblings, there is no legal obligation for them to do so once they become the sole owner through the right of survivorship.

A mother adds her eldest daughter to the title of her home, with the understanding that the daughter will sell the property after her death and divide the proceeds among her siblings. However, after the mother’s passing, the daughter decides to keep the property for herself, arguing that she is the rightful owner by law. The other siblings are left with no choice but to take legal action against their sister, resulting in a costly and emotionally draining legal battle that could have been avoided with clearer estate planning.

Before you add a name or do a title transfer, contact Beeksma Law!

The decision to add a child’s name to your house title should not be made lightly. While the goal is often to simplify estate processes and save on taxes, the potential risks are significant and can lead to far more complicated and costly situations than you might expect.

At Beeksma Law, we focus on estate law and can guide you through planning for your future. Before making any decisions, contact us for a consultation. Together, we can create a plan that avoids these pitfalls and secures your legacy for the next generation.

We also encourage you to consider our other blog articles. We care about the legacy you leave behind for your family, which is why we have covered many estate topics in our blog, such as choosing an executor or understanding what happens to your mortgage when you pass away. 

Disclaimer: This article discusses Estate Planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Many Canadians want to try and avoid probate fees as much as possible and this can guide their estate planning. One area where we see this is when it comes to joint investment accounts. 

However, like joint bank accounts, there are risks involved. What happens to these joint investments when you pass away? How are they treated within the estate?

In this article, we’ll review the legal presumptions surrounding joint ownership. Then we’ll discuss the potential risks to your estate. For personalized advice, we invite you to reach out to our team for a complimentary consultation.

Capital gains tax versus estate taxes and probate fees

The concerns over estate taxes and probate fees are often exaggerated. In reality, these costs are generally less significant than capital gains taxes. Probate fees, which cover the legal process of administering an estate, are typically a small percentage of the estate’s overall value and can be mitigated with effective planning. On the other hand, capital gains taxes can be significantly higher.

Let’s compare: Estate tax is 0.5% for the first $50,000 and 1.5% for anything over $50,000. Let’s compare that to capital gains tax. Your beneficiaries would be taxed on 50% of capital gains up to $250,000. Any gains exceeding $250,000 will be taxed at a higher rate of two-thirds, or about 66.67%.

When someone passes away, their investments are treated as if they’ve been sold at their current market value, which can lead to significant capital gains tax on any increase in value. This tax can often be much higher than probate or estate fees.

What does the law presume about joint investments with an elderly parent?

When a parent adds their child as a joint owner to an investment account, the law typically presumes that this arrangement is a resulting trust rather than a gift.

A resulting trust is a legal concept where the child, as a joint owner, is considered to hold the investment in trust for the benefit of the parent. This means that the child does not gain full ownership of the investment; instead, they are expected to manage it on behalf of the parent. Upon the parent’s death, the presumption is that the investments remain part of the parent’s estate unless there is clear evidence that the parent intended the investments as a gift.

What are the risks of joint ownership of investment accounts?

Joint ownership of investment accounts can pose significant risks, particularly when involving non-spouses such as adult children. Legally, joint accounts with non-spouses do not guarantee that the children will be recognized as beneficial owners. Without clear documentation, these assets might be included in the estate, which can lead to probate fees and legal disputes.

Control and security concerns are also notable with joint accounts. Co-owners can withdraw funds or change account terms without the consent of the other owners, which can diminish the original owner’s control. Furthermore, joint accounts are vulnerable to claims from creditors or complications arising from a co-owner’s divorce. If the court deems the investments as held in trust rather than as a gift, the adult child may lose access to these funds.

The assets would then be returned to the estate and distributed according to the parent’s will or probate laws, which could lead to unexpected financial challenges and disputes among family members.

How can you avoid these pitfalls?

To avoid complications, it is crucial to clearly document the parent’s intentions regarding the joint investments. If the investments are intended as a gift, you should create a gift acknowledgment. If not, have a lawyer draft a trust agreement. This agreement should explicitly state that the investments remain the parent’s property and are managed by the child on the parent’s behalf.

In either case, working with a lawyer to draft these documents is essential to ensure everything is clear. Proper documentation can save significant time, money, and emotional stress for all parties involved, helping to maintain family harmony during difficult times.

Build a strong estate plan with Beeksma Law

When navigating the complexities of joint ownership and estate planning, you need strong, strategic guidance. At Beeksma Law, we bring extensive experience and a deep understanding of the nuances involved. Our team not only excels in estate law but we also have strong connections with professionals in tax, finance, and other related fields.

By choosing Beeksma Law, you benefit from our proven track record to safeguard your financial and legal interests and help you leave behind the greatest gift of all – peace of mind.

Disclaimer: This article discusses Estate Planning. It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

When we think about what we leave behind for our loved ones, we often focus on assets and memories.
But what about debts?

For many, the thought of passing on financial burdens can be just as concerning as planning for the inheritance of wealth. Understanding how your debts will be handled when you’re no longer here is not just a practical matter—it’s an essential part of securing peace of mind for you and your family.

Let’s dive into how different types of debt are managed after death, so you can ensure your estate is settled with clarity and care. We will also talk about how you can build a strong estate plan that will help leave your beneficiaries with peace of mind.

What happens to your debt when you die? Will your beneficiaries inherit your debt?

In Ontario, when you die, your debts do not automatically pass on to your beneficiaries. Instead, your estate is responsible for settling any outstanding debts. Your beneficiaries will not inherit your debts personally, but the debts will be settled using the assets of your estate before any inheritance is distributed. If your estate does not have enough assets to cover your debts, creditors may not be able to claim the shortfall from your beneficiaries.

They would only be responsible for your debt obligations if they are a joint debtor or have co-signed or guaranteed the loan contract.

What happens if you die with more debt than assets?

In estate law, there is something called abatement. When an estate’s assets are insufficient to cover all debts, expenses, taxes, and the intended gifts outlined in the will, the beneficiaries will have their gifts reduced. If abatement is necessary, beneficiaries may receive less than what was originally intended in the will or, in some cases, nothing at all.

If the executor has sold the assets and those are used to pay any debt, and there is still money owing, then the estate would be insolvent or bankrupt and should be assigned to bankruptcy.

What happens to your mortgage when you die?

Secured debts, such as mortgages, are tied to specific assets. In the case of a mortgage, the lender holds a claim against the property. When you pass away, your mortgage debt must be settled, and this is typically done through the estate. The estate trustee will pay off your mortgage debt by either selling the property or transferring it to a beneficiary who will assume responsibility for the mortgage, subject to lender approval.

If there is a surviving co-borrower on the mortgage, they will continue to be responsible for paying the mortgage.

This is subject to what is in your lender agreement so be sure to look at that!

What happens to your credit card debt and other unsecured debt?

Unsecured debts, such as credit card balances, an unsecured line of credit or personal loans, are managed differently.

These debts are repaid from the assets of your estate. However, if the estate does not have sufficient assets to cover the unsecured debts, that outstanding balance may remain unpaid. Creditors generally cannot claim these unpaid debts from your beneficiaries.

Beeksma Law: Helping you leave behind peace of mind

Beeksma Law is committed to providing exceptional estate planning services that ensure your loved ones are protected from the burden of unresolved debts. Our team of experienced estate lawyers is not only skilled in navigating the complexities of debt management after death but also connected with a network of professionals, including valuation experts and insolvency and bankruptcy lawyers. This collaboration ensures that every aspect of your estate is handled with precision and care, from asset valuation to debt settlement.

At Beeksma Law, we understand that your estate plan is about more than just distributing assets—it’s about leaving behind peace of mind. With our comprehensive approach and professional connections, you can trust that your estate will be managed efficiently, preserving your legacy and safeguarding your family’s future.

Disclaimer: This article discusses Estate Planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Let’s talk about your legacy. 

What will you be remembered for? What will your loved ones think of you after you’ve passed away? 

We want to help you leave behind peace of mind and clarity. We want your loved ones to know and understand your wishes and be able to carry them out without too much stress.

To do that, you need a comprehensive estate plan. Creating a comprehensive plan helps ensure that your wishes are honoured and your loved ones are taken care of after your passing.

It also simplifies the process for your estate trustee (commonly referred to as your executor), the person responsible for carrying out your wishes. We have discussed before how important that role is and how it is a serious responsibility that spans from going through the probate process to distributing your assets. 

This article will explore how to build an estate plan that makes your estate trustee’s role easier.

Have a comprehensive estate plan, including a will and other legal documents

Of course, you do not want to die without a will. Doing so creates many headaches for your estate trustee and beneficiaries, including paying more estate tax, not having a guardian for your minor children and can lead to family disputes.

However, an effective estate plan encompasses more than just a will. While the will is a central component outlining how you want your assets distributed, there are other critical documents to consider:

• Power of Attorney for Property and a Power of Attorney for Personal Care: These documents will appoint someone to make decisions on your behalf if you become incapacitated. This makes your estate trustee’s role easier when you pass because your financial and personal affairs will already be managed in accordance with your wishes, minimizing confusion and ensuring a smooth transition.
• Gift acknowledgments or trust agreements (if necessary): In a previous article, we discussed the importance of making your wishes known. Drafting supporting agreements and documents can ensure that there is no confusion as to your true intentions.  

These documents ensure that every aspect of your estate is handled according to your preferences and provide clear instructions for your executor. Depending on the complexity of your estate, you may also choose to have other documents drafted. You would need to an estate lawyer well-versed in this area (such as ourselves). 

Avoid common estate planning mistakes 

You’ll want to consider how you can avoid these common mistakes related to estate and will planning. 

Not updating your will and powers of attorney: Life changes such as marriage, divorce, or the birth of a child should prompt a review and potential update of your will and other documents. You may need to add to your will, such as if you need to name a guardian for your minor children.

This could include a change in your life or the life of your attorney. For example, if your power of attorney for personal care moves to another province, it’s a good idea to name someone you trust who is closer and can be more hands-on in your care.

Not naming contingent beneficiaries, attorneys and estate trustees: Always name a backup or alternate. Your original appointment may predecease you or simply prevent you from taking on the role. 

Overlooking important decisions or assets: You may have a will, but it may be missing key decisions or assets, such as digital assets, joint bank accounts, pets and more. 

Ignoring tax implications: Consult with a financial advisor (we have trusted advisors we can recommend) to understand the tax implications for your beneficiaries and plan accordingly. This is especially important when there are changes in legislation. 

By addressing these issues, you can prevent unnecessary complications and ensure your estate is distributed as intended.

Make all of your important documents easy to find

For your executor, locating all the necessary documents (estate planning documents, life insurance policies, etc.) quickly is crucial and can prevent unnecessary delays. To make the process smoother, organize and store all estate planning documents in a secure, easily accessible place, and ensure your executor knows their location. Additionally, you may consider creating a master document list that compiles all your documents, accounts, and assets, including contact information for your attorney, financial advisor, and insurance agents.

Beeksma Law: Strategic advice for your estate planning process 

At Beeskma Law, we specialize in providing strategic advice to help you navigate the estate planning process. Our goal is to make sure your wishes are clearly defined and your executor’s role is as straightforward as possible.

Here’s how we can assist you: We offer personalized consultations, taking the time to understand your unique situation and tailoring our advice to meet your specific needs. Our comprehensive planning ensures that all aspects of your estate plan are addressed, guiding you through the entire process. Additionally, we provide ongoing support, helping you update your plan as life changes and new laws come into effect.

Creating an estate plan doesn’t have to be daunting. With careful planning and the right support, you can ensure your executor has clear instructions, reducing stress and potential conflicts during a difficult time.

Disclaimer: This article discusses estate planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

You sat down, put together a will (either with a lawyer or using a kit) and now you’re done. 

Right? 

Or do you need to update your will and other documents to reflect significant changes in your life? When should you consider updating your will and when should you have a new one drafted? And do you need any other documents to complete your estate planning?

Do you have a full estate plan? 

Many people think they only need a will; however, you need both a will and powers of attorney.

Powers of attorney ensure that your wishes are carried out if you are incapacitated and unable to make those decisions for yourself. There are two types of power of attorney documents that you will want to have prepared: a Power of Attorney for Personal Care and a Power of Attorney for Finances. 

If you want to learn more about the types of powers of attorney and when they are used, you can learn more at these articles: 

• Your Powers of Attorney: Important Documents You Need in Ontario
• The real cost of not having powers of attorney in Ontario
• A Will vs. A Power of Attorney: What’s the difference?    

A will, on the other hand, only comes into effect once you pass away and cannot help if you are incapacitated but still living.  

Why is it important to update your will and estate plan?

Our lives are always changing, and if you don’t update your estate planning documents to keep up with those changes, it can create problems for your loved ones.

For example, imagine you have a new baby but forget to update your will to include them. This can cause confusion about who will take care of your child and manage their inheritance if something happens to you.

Or, think about your estate trustee—the person you chose to handle matters after you are gone. If they experience life changes and they can no longer do the job, the process will be delayed because a new person will need to be appointed. This can make things more stressful and take longer for your family to get what you left for them.

Another example is if you buy a new house or start a business and don’t update your estate plan. These new assets might not be given out the way you want, leading to disagreements among your family members.

By keeping your documents updated, you make sure that your wishes are clear, helping to avoid confusion, arguments, and delays for your loved ones.

Have you had a major life event? 

Have you had a major life event?

Certain big life events mean you should update your will. Here are some examples:

1. Getting Married or Divorced: If you get married or divorced, you might want to include or remove your spouse from your will.

2. Adoption or Birth of a Child: If you have a new baby or adopt a child, you’ll want to make sure they are included in your will for their care and inheritance.

3. Someone Passes Away: If a person named in your will dies, you need to choose new people.

4. Buying a New House or Getting Money: If you buy a new house, start a business, or receive a large amount of money, you should update your will to include these new assets.

5. Health Changes: If your health or the health of someone named in your will changes a lot, you might need to make some adjustments.

6. Changes in Relationships: If your relationship with someone named in your will changes, like falling out with a friend or reconnecting with a family member, you should update your will.

By keeping your will updated, you make sure your current wishes are known and can be followed, which helps your loved ones understand what you want.

Do you need to update your estate trustee (or executor)? 

One of the most important decisions that you will make is choosing someone to administer your estate. That person will handle many important tasks once you pass away, from applying for probate to distributing your assets to the beneficiaries. 

Therefore, it is a good idea to ask whether you need to make a new appointment. Perhaps the person that you originally had in mind no longer lives nearby or has the circumstances to shoulder this weighty responsibility. Perhaps you are no longer on good terms. Perhaps your finances have become more complicated and you want to hire a professional to handle matters.

Whatever the reason, consider whether you need to reconsider your choice. 

We have articles on this topic, which you can find here: 

• Should I appoint a trust company as my power of attorney for property or estate trustee (executor)? 
• What You Need to Know When Choosing Your Executor

Do you need to make changes now that your children are older?

As your children grow older, it’s important to update your will to match their changing needs and circumstances. You might no longer need guardianship provisions if your children are now adults. It’s a good time to adjust any trusts or financial support plans set up for them when they were younger, ensuring they have direct access to their inheritance or managing funds differently. Updating your will to reflect your children’s current situations, like their careers, education plans, or where they live, is also key.

Consider naming your adult children as executors now that they’re capable, roles that were once held by other adults. Include any new family members, such as spouses or grandchildren, so everyone is provided for as you intend. And as family relationships evolve, updating your will to reflect these changes, like adjusting inheritances or responsibilities, ensures your wishes are clear. Regular updates to your will help ensure your family is looked after according to your wishes.

Has it been more than three years? 

As a general rule, review your will every three years, even if you have not experienced any significant changes. This protects you if the law changes or there are new tax regulations. Therefore, updating your will ensures it remains compliant and takes advantage of any new opportunities or protections. Regularly reviewing your will every few years helps you make sure that it accurately reflects your current wishes and circumstances.

Is it time to update your estate plan? We are here to help you get started!

At Beeksma Law, we focus on estate law and guide families toward a legacy of peace of mind rather than stress and complexity. Whether you require a simple codicil to amend your will or a completely new one to invalidate an outdated version, we are here to assist you every step of the way.

With decades of collective experience, our team offers extensive expertise in estate litigation. This enables us to identify potential issues in your documents and craft strategic, transparent solutions that minimize confusion for your beneficiaries.

To discuss your estate plan, please reach out to our office today. We are more than happy to discuss your needs during our complimentary call.