What if my Mom's name isn't on the house when Dad dies?

Do you ever wonder whether the legal documents and arrangements you've had in place for years need to be updated to suit your current situation? If so, you're not alone. Here's a question I recently received on this blog that is similar to many reader questions:

"My father has the house in his name only. My parents have been together for 60 years (and in the same house). Should my mother push to have her name added to the deed or is it assumed that after 60 years of being in the house it's considered hers too? My father's health is starting to fail and I just want to make sure everything is in place. He did leave her the property in his will, but not sure if that would cause tax issues?"

As your father makes these decisions about his property, here are some of the things he should consider:

If only one name is on a land deed, it will not be assumed that anyone else owns it. Not even a spouse of 60 years.

The contents of the house, on the other hand, will be assumed to belong to your mother if she outlives your father, and vice versa.

Depending on where in Canada your parents live, your mother might have a dower right to the property. That right only exists in a couple of provinces today. It gives a married person the right to live in the matrimonial property for the rest of his or her life, but it does not convey ownership. The spouse with the dower right could not sell or mortgage the property, which would eventually pass to the beneficiaries of the first spouse's will.

The fact that your father has left your mother the house in his will is good, as on the face of it this means that she will not lose her home should her husband pass away. She needs that peace of mind, as any of us would.

I don't believe that any tax issues would arise from this transfer, assuming that the house is your father's principal residence. From the information you gave me, I'm prepared to assume that it is his principal residence until I hear otherwise. Each of us is allowed to own and eventually sell/give away a principal residence without having to pay any tax on the transfer. So that means no tax to the estate because of transferring the house.

Your mother should not experience tax issues because of the house either, as Canadians do not pay tax on property we inherit from Canadian estates. This is not to say there will be no tax payable on anything in the estate; my answer is restricted to the tax situation on the house.

Please understand that I'm giving this answer with only a few words of facts. There could be other facts that affect the situation (for example, why is it in your father's name only anyway?). It never hurts to discuss tax questions with an accountant.

For the sake of completeness, I'll point out the downside of having the house only in your father's name and his leaving it to your mother in his will. First of all, debts and expenses of an estate must be paid before a beneficiary gets anything. If there are a lot of debts in the estate, it's possible the house would have to be sold to pay them. Secondly, the probate fee you pay at the court is based on the value of the estate. Some provinces, especially Ontario and BC, have high probate percentages, and if the house is in the estate (which it will be if it's in your father's name alone) it will increase the cost of probate.

These are all factors for your father to contemplate before making a decision about what is best for himself and for your mother.

You said your father's health is failing. If this means that his mental health has begun to deteriorate, it may soon be too late for him to make legal documents dealing with his property. He doesn't need perfect mental abilities of course, but he does have to be able to understand what he is doing, and the effect his actions will have on his family. If he is going to make changes, it will have to be done soon.

I'm really glad that you're helping your parents by openly discussing these issues with them and finding the information they need. I hope my answer helps with the decision-making process.