Keeping things hidden

Let’s say you are buying a house, but you are an extremely private person. Can you hide the price you paid for the house so that no one can find out?

The short answer is, yes. If you truly do not want to show your purchase price, you can pay your Land Transfer Tax in advance and show the purchase price on the deed as zero. You will need to send the Land Transfer Tax down to the ministry office, have them approve the amount, and then have them enter a statement onto the deed to indicate that the tax has been paid. If you have enough time before your closing and truly want this hidden, you can do so.

How to inherit an estate

Most of us, at some point in our lives, will lose a loved one who will have left us something in their will. If what you inherit is significant in value, you should keep a few points in mind.

  1. Take your time. You need to give yourself time to grieve, and then time to determine what you want to do. Making a rushed decision about where to invest or what to buy will not be helpful. Put the money in a bank account, and come back to it when the grieving period is over.
  2. Hire a professional. There could be major tax or other consequences from what you choose to do with the inheritance. Before you take any action, be sure you know what the result will be.
  3. Think about your own estate plan. Now that your assets have increased, it may be time to have your own will altered (or drafted in the first place) so that your inheritance will go on to the person of your choice, in the manner of your choosing.
  4. Remember that the best course of action for you may not be obvious to others. Choose the one that makes sense for you and your family, regardless of what others think.

Happy holidays!

Whether you are celebrating or simply taking some time off, we wish you a very happy holiday season.

Helping your child buy a home

Most parents work hard to protect and help their children as they grow, and continue to do so when their children become adults. One aspect of helping is often assisting their children in buying a home, often through co-signing a mortgage.

Acting as a co-signer or guarantor on a mortgage may seem like a simple thing to do. You have equity in your home and likely a much longer work record; your child has saved a down payment but is having trouble getting approved on his or her own. What you need to be comfortable with, however, is that, by signing, you become equally responsible for the mortgage. If your child stops paying the mortgage for any reason, the bank will go after you. In my experience, it is far more acrimonious when there is a fight between parents and children than between strangers.

It’s great to be able to help your child make such a major purchase. Before you do, you always want to be comfortable with your child’s financial status. A lack of employment history is easily dealt with; poor money management is a bigger problem. Be sure your child truly is ready to buy a home.

Blending

I have clients who are a classic blended family. She had a child young and separated from the father when her daughter was three; he divorced his wife when his daughter was seven; when they married, they had a child together. They consider all three children to be both of theirs, as they have jointly raised them all, but he never adopted her daughter and she never adopted his. They have drafted their wills to reflect their view of their family rather than their legal status.

Pop quiz: what would have happened if they hadn’t done wills?

Given that most of their assets are jointly held, on the death of the first to die, the survivor would receive everything. However, on the death of the second partner, only that person’s children would inherit. If she died first, her daughter would receive nothing, and vice versa. This would have been completely contrary to their wishes.

Even if you have a cookie-cutter family, you should consider having a will. If you fall anywhere outside the norm, it is vital.

What exactly does a real estate lawyer do?

The practice of real estate law is sometimes a bit of a mystery to the public. When people hear the word “lawyer,” they immediately think of Law & Order and courtroom work. What happens on the transactional end isn’t as exciting to the outsider, but there are a lot of things that we do.

Real estate lawyers check title to make sure that you don’t have to buy the house with a restriction you can’t live with; check off title to make sure, for example, that the property taxes are all paid; prepare all of the paperwork; and meet with the client to sign everything. If we receive the offer before it’s firm, we can also have input into conditions and other items.

I came across this article in the Globe and Mail a few weeks ago, which has more tips on what to look for in a real estate lawyer and why it’s important to have one. In Ontario, you cannot buy or sell a property without a lawyer, but hiring one who makes real estate a regular part of their practice can make all the difference.

Your family may have changed. Has your will?

Two weeks ago, I wrote about updating your will for your own benefit. Today, I want to talk about updating your will for the benefit of others.

Last month, Elizabeth O’Brien wrote this article on MarketWatch. She mentions a vast number of reasons why it can be disastrous to your family if you don’t keep things up-to-date, such as:

  • Stepchildren being disinherited
  • Former spouses inheriting instead of children
  • Spouses of your children inheriting instead of grandchildren
  • Beneficiaries who are spendthrifts or have addiction problems inheriting outright instead of through a trust

You owe it to yourself to keep your documents updated. You also owe it to your family.

Do you have to disclose if someone died in your home?

Generally, you are not required to share information about the house as long as you don’t hide anything or deliberately lie about anything. You do not have to offer information that your spouse or parent died at home, or that there was a suicide or even a murder in the home.

Keep in mind, however, that some buyers are more sensitive than others. If you sell to a sensitive buyer who might not have bought if she or he had known about the death, you could run the risk of a lawsuit after closing. In this case, the wiser choice might be to let the buyer know and let them make that decision with full knowledge – and sell to someone who doesn’t mind.

Changing it up

Many people know that, on marriage, in Ontario, your will is automatically revoked. There is a good public policy reason for this: your spouse should not be disinherited simply because you forgot to update your will. (I touched on the issue of predatory marriages a while back.)

What many people don’t understand, however, is that separation and divorce do not automatically revoke a will. If you are divorced, your estate is treated as if your spouse died before you; he or she will not be able to be your executor or inherit, but you might want to rethink your ex-brother-in-law as your alternate executor and beneficiary from the will you did just after you got married 20 years ago.

If you are separated, it is much murkier. If you have a formal separation agreement in place, your former spouse likely won’t be able to inherit, though you still have the same problem of your alternates. If you don’t have a separation agreement, though, there are no bans on your former spouse inheriting your entire estate.

This is likely not the solution you want. If you separate, you should have your will redone as soon as possible.

Are you a non-resident?

Many people are now aware of the new tax that applies to non-resident buyers looking to purchase property in Ontario. However, there still seems to be a lot of confusion when it comes to non-resident sellers.

If you are not a resident of Canada and you are selling a property, your lawyer may need to hold back 25% of the sale price to protect the buyer against non-resident withholding taxes until you can get a clearance certificate from CRA. Wait times vary, but it can take up to several months from the time you apply  to the time you get that certificate, and the money cannot be released until then.

If you are not a resident of Canada and are selling a property here, you should speak to an accountant early in the process to get the application started so that your money is tied up for as short a period as possible.