House in the wife's name only - what if she passes away?

Most married couples own their homes as joint tenants, so that if one of them passes away, the other one automatically owns the home. This arrangement helps to give assurance that the surviving spouse and the family's children will legally and financially be able to continue living in the home.

But there are sometimes reasons why couples set up other arrangements. Often those reasons are related to finances or poor credit, but it could also be to avoid unwanted legal consequences or to protect assets from potential creditors. Not owning the home jointly may be the best arrangement available for a particular couple, but it tends to leave them wondering about who would own what should one of them pass away.

A reader left me this question about their home:

"After being married for almost 3 years, husband and wife put down payment together to purchase a house, but the title of the house is only under the wife's name. What will happen if the husband or wife pass away during marriage?"

If the husband passes away first, really nothing is going to happen about the house, as he doesn't own it. If the wife should pass away first, the answer could be much more complicated. Here are some of the factors that would be taken into consideration when dealing with the home:

Did the wife leave a will? If so, the will should address the question of what is to happen with the home. She might have left a will leaving the house directly to her husband. More likely, she may have left a will leaving her entire estate to her husband. If she has left the entire estate to him, that will of course include the house. Her will might also have done something entirely different, such as putting the house into a trust for their children, or directing that it be sold. The will should also address the household and personal items in the home.

Does the couple live in a province with Dower rights (such as Alberta)? If so, the Dower Act states that on the passing of the wife, the husband would have the right to live in the house for the rest of his life. He would always have a roof over his head, but he would not be able to sell or mortgage the house as he would not own it.

Who else is in the picture? In the absence of a will, the husband would receive whatever the law of the province of residence says he will receive from his wife's estate. He may have to share with the family's children and/or with any children the wife had in a previous relationship. Intestacy laws tend to work on fractions as opposed to specific assets, and would not necessarily include or exclude the home from the husband's share.

Is the husband adquately provided for, either by the wife's will, or by intestacy law? All across Canada, surviving spouses have the right to claim a larger portion of an estate if they have not been properly provided for. This is true whether or not the deceased spouse left a valid will behind. The husband might launch a claim of this sort and through that receive the house. Again, this might depend on who else is in the picture with competing claims.

Does the wife have a lot of debt? Depending on the type and amount of debt, the house might have to be sold to pay the wife's liabilities. Debts and taxes must be paid before any beneficiaries receive anything from the estate, even if that means selling the home.

Is the husband in bankruptcy? If so, his inheritance, including the house, may be seized by the receiver and used to satisfy his debts.

As you can see, nothing good is going to happen without some effort by the wife to protect her husband in the event of her death. She should prepare a will that sets out her intentions for the house. She should also speak with an estate-planning lawyer in her province who can inform her more specifically about her options and consequences.