It’s a natural desire for parents to want to leave as much of their estate to their children (or other chosen heirs) as is possible.
And the fear that the government is going to descend upon the estate with fees and taxes is enough to cause some older home owners to seek out methods to pass along the assets that it took them a lifetime to accumulate without losing that legacy to a faceless bureaucracy.
But some of the methods chosen by elderly home owners may end up costing more than anticipated — both monetarily and in terms of family harmony.
Robert Whittome, a lawyer and partner with Coleman, Fraser, Whittome and Lehan, said that it isn’t always a simple matter to determine how to handle estate planning.
“There isn’t one simple bit of advice that I can give that will be valid across the board,” he said. “There are property transfer taxes that might apply, capital gains taxes whose exemption could be lost, and a possibility that the whole thing could be drawn back into probate under certain circumstances.”
The matter gets even more convoluted, according to Whittome, when it isn’t a primary residence that is being transferred, but rather a cottage or vacation property.
“And then there’s the whole question of what should be done if the parent has to leave the home to go to an extended care facility,” he said. “That can complicate matters even further.”
Del Elgersma, a partner at the Beacon Law Centre (a firm specializing in estate planning with offices in Sidney), agrees.
“This popular wisdom that it’s a good idea to get your property into your child’s name before you pass away really kind of started when, back in the 1990s the provincial government waived the probate fees under certain circumstances where such a transfer of ownership had occurred.
“But probate fees above $50k are only 1.4 per cent (of the property’s value). A transfer that opens up the possibility of capital gains taxes can result in losses of as high as 44 per cent.”
And then there are other issues, said Elgersma. Some parents have transferred title to one of a group of siblings with the understanding that, upon their death, the property would be sold and the assets divided equally amongst all the children. There have been cases where that hope goes unrealized when the child with title to a property disputes that there was ever such intent in the original transfer.
“It can get very messy,” said Elgersma.
In the final analysis, it makes sense to seek out legal and accounting advice before proceeding in any sort of title transfer, according to Whittome.
“Let the experts in the field look at your individual circumstances and give you the best options available to you,” he said. “In the end, you’ll be happy that you did.”
Taking the advice of non-professionals is generally not in your best interest, said Whittome.
“The question of estate planning can be very complicated,” he said. “Look at it as a sort of Rubik’s cube … just when you think you’ve got it figured out, you look at another side of it, and find that you haven’t gotten it right after all.”
— Tim Collins/News contributor
