Posted on October 30, 2012 · Posted in Blog

Who Gets the House?

By Wes Stevenson

For most families in Canada, the most valuable asset they own is their home, and that asset becomes very desirable to the family’s heirs once they are deceased.

Since modern-day families are often made up of second marriages and blended families, it sets up a scenario which leaves the children battling with a step parent for an asset that may have doubled or tripled in value.

family estate planningThe challenges of blended families upon death

In Canada the divorce rate has remained fairly static for the past decade and in September of this year Stats Canada released a report which found a higher divorce rate may well lead to greater numbers of second marriages, which in turn creates the challenge and possible conflict of deciding on who owns the matrimonial home. It also begs the question, “How should people own their homes?”

In past years, couples owned their homes together and when one of them died, the home went to the surviving spouse. And when the second spouse died the remaining wealth went to the kids. However, with the new family statistics on second and third marriages, there could be big trouble on the horizon.

Let me give you an example. If one looks at present day “joint tenancy” where the surviving spouse gets the house, it doesn’t bode well for the deceased’s children if that’s the second spouse. Joint tenancy means that each spouse owns an equal and undivided share of the home and the one that lives longer gets full title.

Those who may be in second and third marriages should look at the possibility of owning their home as “tenants in common.” By owning their home in this manner, each spouse can then have their share of the property go to whoever they want, including the children from an earlier marriage.

In most jurisdictions, the rules are set up in favour of joint tenancy, and it usually takes a lawyer to change it into tenants in common. There are many cases where a spouse who has passed on is the one who paid for the house or did most of the renovations, and the surviving spouse inherits it all. However, anyone can retain control of their home from their grave if they set up ownership well in advance of their death.

To reduce the potential for battles over the house, one can identify other areas of the estate to gift to those potential beneficiaries who feel they may be getting a raw deal, thus reducing future conflict. Estate planning regarding jointly held property, with the right of survivorship, should go directly to the other person. This avoids any probate fees and it has become popular amongst financial planners and their clients.

It is the ultimate consideration when partners take care of their surviving spouse after death. As well, one should also reconsider whether they want to create a situation where a grieving spouse is forced to leave the matrimonial home to clean up an estate. A more appropriate and humane approach would be to provide the surviving partner with a period of time to find alternative living arrangements. This approach would also allow the separation of the children from the surviving step parent.

wills and estate planningIn summary, one needs to consider the many issues left behind after their death; things like taxes, maintenance, strata fees, insurance and other costs associated with a home. By not planning their estate, the deceased partner creates additional hardship for their heirs and loved ones.
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