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Tuesday, August 15, 2017

Joint property cannot be clawed back to satisfy deceased's debt

I recently came across an article by Toronto lawyer Suzana Popovic-Montag that talks about what happens to joint property owned by a deceased person whose estate does not have enough funds to pay all debts. This is something that many executors must deal with, and it certainly is of interest to spouses everywhere.

The article is about the case in which a husband and wife in Ontario jointly owned their matrimonial home. The husband died and due to the fact that the estate could not pay the man's debts, the estate went into bankruptcy. The creditors attempted to have the house clawed back into the estate to pay the debts. The debts in question were not debts against the house (e.g. a mortgage or a secured line of credit). The went to court and the judge decided that the house could not be clawed back. To read the article with more detail about this, click here. The case itself is called Re Cameron and can be read by clicking here.

The gist of the decision is that the court considered that upon the death of a joint owner, there was no "transfer" of the house to the surviving owner. It was rather that the deceased person's ownership was simply extinguished, leaving one owner already on title.

This should be comforting news to anyone out there who is worried about losing his or her home due to their spouse's insufficient estate.

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