I sold my client’s home pursuant to a Power of Attorney The home was supposed to close last week but due to the Buyer’s circumstances, it’s been delayed 3 weeks.
The Seller has now been rushed to hospital. Are there any implications if the Seller passes before the upcoming closing? Tax implications? Estate implications?
You need the deal to close before the owner dies. At that point, the POA comes to an end, and the Attorney has no further powers.
We would then require a Certificate of Appointment of Estate Trustee. That needs to be obtained and registered before the property can be conveyed to the Buyer. That will take about 7 months from the date of the application. And, I’m sure that they are not going to be ready to even make an application for several months following death.
There is an Estate Administration Tax that amounts to about $15,000.00 per one million dollars. That can add up.
If you want to avoid:
1) the delay, and
2) the tax,
then, that’s easy to do.
The present Attorney needs to transfer the property as soon as possible. It could be placed
1) in the name of the Attorney,
2) in Joint Tenancy with the Attorney, or
3) in Joint Tenancy with a Corporation.
In addition, there should be a Trust Declaration confirming that ownership is being held in trust on behalf of the current owner. That will eliminate Land Transfer Taxes.
So, if you act quickly, all this can be accomplished prior to the current owner passing away.
Assuming that the property constitutes the principal residence of the Seller, then the exemption from capital gains taxes would apply.
Brian Madigan LL.B., Broker