Question:
The husband and wife have been married for more than 30 years and have 4 adult children. They co-own their primary residence and two condo investments. Can one of them dictate how the properties should be handled on their passing and leave a will, executor or attorney (pursuant to a power of attorney) to someone other than their spouse? Or, do the properties get passed to the surviving spouse? All they have is a marriage certificate, and nothing to specify about what kind of ownership they have.
Answer:
This question raises many problems, and you should have a good idea about the possible issues that are presented: taxation, transfer of property both before and after death and the trust risks. A lawyer who does Wills and Estates should be consulted.
There are all kinds of issues here, and it would be important to know whether the couple get along and this is a joint planning venture.
The fact that they have a “marriage certificate” means that the Family Law Act and Succession Law Reform Act will treat them as “married”.
You say that there is nothing to specify what kind of ownership they have. However, there is evidence, and it was all set out in the “Transfer/Deed”. They either hold the property as Joint Tenants or as Tenants-in-common. The right of survivorship applies to joint tenants. Joint tenancy can be severed upon notice to the other party. If there’s no survivorship, then the properties are transferred in accordance with their estate arrangements.
What is their intention with respect to the properties? Do they want all four to share equally? Really, that’s the second step in most cases. There’s no capital gains tax if the property is transferred to the surviving spouse, however, if the property is transferred over to the children capital gains taxes will be payable right away on the death of the first to pass away. Only the principal residence is exempt from capital gains tax. Leaving it with the surviving spouse would add more years to the exemption, as would the other properties if they were left to the surviving spouse.
The major risk in terms of one of the two parties “dictating” the result, is that they inherit all the properties and can leave them to whoever they want, and that might be quite different from the views of the deceased spouse.
So, the first and primary question is whether or not the spouses get along and have a common mutual intention. If not, then, the estate plan will require some extra work.
Brian Madigan LL.B., Broker