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.

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.

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.

Top 5 Mistakes Made by Executors

Being an executor is hard work. It’s a thankless job that most people take on because they love the person who left them in charge. That being said, it’s still important to do the job right, and there can be some fairly serious consequences if you don’t. Here are some areas where many executors get tripped up:

  1. Ignoring parts of the will that the beneficiaries don’t like. It’s not up to you, and it’s not up to the beneficiaries. If it’s in the will, you have to do it. The only way to get around it is to get a court order permitting you to do something else.
  2. Failure to communicate. This really is a mistake in just about every area of life, but gets particularly fraught in the area of estates. People want to know what’s going on. Even if nothing is happening for long stretches of time, tell the beneficiaries. There will be fewer fights if they know that you’re doing your job. Keeping secrets won’t help anyone, and could lead to a beneficiary suing simply because they don’t know what’s happening and have become suspicious.
  3. Treating the estate as your own bank account. Tip: it’s not. It has to be kept separate. Ultimately, beneficiaries can require a formal accounting that is approved by the courts, and if you have taken estate money, even if you have paid it back, you could be in trouble. You’ll be in even more trouble if you don’t pay it back. People have gone to jail for this. Don’t let that happen to you. If you’re not sure if it’s a proper estate expense, ask your lawyer. That’s what you’re paying (a proper estate expense) for.
  4. Paying beneficiaries before paying debts. Debts have to be paid first. This includes the funeral, and any debts that arose before death. Beneficiaries get whatever is left. If that’s nothing, then so be it. If you pay beneficiaries before paying debts, you will be personally liable for those debts.
  5. Trying to do everything too cheaply. Keeping costs low is one thing; trying to do everything without any help is another. Estate accounting is complicated; an accountant is an appropriate expense. So is a lawyer. So is a realtor, if there is a house to sell, especially if it’s in a city that you don’t live in. Professional expenses are almost always appropriate to pay out of the estate. Don’t skimp there.

SPIS

I thought these were dead, but then I saw one on a deal the other day.

A Seller Property Information Sheet is a form designed to give buyers additional information about the house. It asks sellers to list any known defects, pending work orders or tax increases, oversight by any regulatory body such as conservation authorities, etc. The idea is that, if you disclose everything up front, you reduce your liability. Here’s the problem: it doesn’t reduce liability, primarily because they are often filled out wrong.

If you don’t say anything about the sprinkler system, believing it to be fine, the buyers have the responsibility of making sure that they do an inspection before closing. If it fails after closing, you are better protected as long as you didn’t hide any defects.

If, however, you say on the SPIS that there are no issues with the sprinkler system, and it turns out that there are, you have now been untruthful. This will cause a much bigger problem down the line, even if you honestly believed that there were no problems.

If you are selling and are asked to sign a SPIS, be very careful.

Are you an artist? Then you definitely need a will.

When Sylvia Plath died, her executor was her ex-husband’s sister. This sister was, effectively, given full authority to determine Ms. Plath’s writing legacy. Ms. Plath likely listed her as her executor at a time when she was still married; we may never know if she wanted her to remain as her executor, or if she simply forgot that it was set up this way, and we will never know if her literary estate was managed in the way that Ms. Plath wanted.

Artists have unique considerations when it comes to estate planning. There is not simply money; there are also copyright and trademarks, and the ability to licence or sell artworks for years or decades to come. It is particularly important to choose not only the executor of your financial estate, but who will manage your artistic legacy.

What happens if your inheritance is late?

With estates, and assets, becoming increasingly complicated, it is not uncommon for it to take some time to distribute assets out to beneficiaries. Sometimes, this can take several months; sometimes, several years. If your inheritance is sitting in a bank account for an extended amount of time, what are your rights?

In Ontario, we have what is informally known as the “executor’s year”: basically, the executor of an estate has one calendar year to start distributing assets, after which the beneficiary is entitled to interest on their inheritance back-dated to the date of death. While this timeline can be extended with justification, generally, as an executor, you should work to have the assets distributed as quickly as is practical.

Protect yourself from fraud through title insurance

A few weeks ago, I mentioned title insurance as a common cost on a purchase. What is title insurance?

Basically, title insurance protects against things you have no control over. The big one is fraud; if someone impersonates you and puts a fake mortgage on your house, or sells it, then your title insurance will fix things.

 

It also protects against a former owner doing work without a permit, or a neighbour building something onto your property.

 

Given the small cost of title insurance, it’s generally well worth it.

Happy Canada Day!

We hope that you have a safe and happy holiday weekend.