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Tuesday, March 29, 2016

Adding someone to the title of your house may be the easiest big mistake you'll make (updated July 2019)

I encourage the readers of this blog to ask questions for several reasons. The most important reason is that I want to know what's on your minds. I want to know what information you need so that I can figure out what role I can play in getting that information out there.

There are some topics that pop up time and time again, and even though I've answered similar questions many times, I keep answering them. I recently received a question about adding names to property, and regular readers of this blog know that I've talked about that endlessly. But seeing the question asked so casually made me think about how vulnerable many people are. They have no idea how much trouble they are causing themselves and their families by taking legal steps they should simply not take.

Here's a question I received recently:

"How easy is it to add someone to the title of my house? Can it be done at anytime or is this a question that I should be asking a bank?"

Here's what I gather from the question:
1. You expect to hear that it's easy to add someone, probably because you've heard from friends or others that it's easy.
2. You don't realize that you are affecting your own legal rights, as evidenced by the fact that you think this is a question to ask a banker.
3. Your plan is likely aimed at avoiding probate or otherwise involved with what happens to your house on your death, because you came to a blog that's all about inheritance.

Why oh why do people keep adding others to their titles? It DOESN'T WORK. Okay, I acknowledge that there are some good reasons to add a person. Perhaps you have just married and you want to own your marital home in joint names. I'm on board with that. But when it comes to inheritance issues, adding people to titles is almost always the absolute wrong way to go about things. Sure, your friends found it easy to add the kids but wait until those friends pass away and the kids have to deal with the mess left behind. It won't seem so easy then.

Instead of looking at adding a name to your title then making that step fit your goal, do things the other way around. What are you actually trying to achieve? What is the goal? And can it be achieved in some other, better way than risking what may be your largest asset?

Yes, there is risk. A great deal of risk when you add someone to your title. You do realize that "adding" them means you're giving it to them, right? I mean, you can't just remove them later if you change your mind. Keep this golden rule in mind: adding them is easy, but removing them is not.

You can't remove them because by adding them to the title, you've created legal rights for them. You've given them the rights of an owner. The fact that the property is "really" yours will not exist in law. And this is where the risk to you comes in. If the other owner - the person you've added - gets divorced, you could lose your home because it's actually one of that person's assets too. Same for that person being sued or losing a business. You could well lose your home because "adding" someone was easy and you didn't think of the consequences.

This brings us back to your goal. What is it you want to achieve? Is your goal to avoid probate fees? We now know that adding the kids' names to the title of the house no longer works. The house still goes into the estate despite the joint names.

Are you trying to leave the house to the kids? Why not just leave it in your estate and use your will to give the estate to the kids? That avoids creating a tax bill for the kids, and avoids that whole idiotic expectation that several children can own one house together without problems.

I urge you to sit down with an estate planning lawyer before you make any changes to your title. Find out the pros and cons of your proposed steps. Review your goals and find out how they can be achieved more efficiently and safely. Make sure your plans for your home are not made in isolation, as they have to work with your will, your insurance, designations made on your financial instruments, and other variables such as separation agreements.

Making one big mistake - and carelessly adding a name to a title is a BIG one - can mess up your entire estate plan and leave your family with a confusing, costly mess.


  1. Agree with your comments. If absolutely needed for some specific reason but do not want to transfer legal ownership, you could possibly document with a bare trust declaration - but definitely not ideal and doesn't help you if probate avoidance is the goal (which rarely should be the primary/only goal).

  2. My spouse and I have separated, but still both dwell on our jointly owned property (separate dwellings). We have an only child, whom both of us agree shall inherit the property. But say I die first, and my spouse remarries or takes a common-law partner; is there not a danger then that she would come to inherit at least some of the estate? This is the only reason I had thought to add our daughter's name to the property.

    1. Yes, if you pass away your spouse could enter a new relationship and that could well end up with the new person inheriting from your spouse. Just to make sure that you are fully advised and informed, see a lawyer in your province to talk about how the law treats a matrimonial residence. For example, if your spouse marries someone else and they live in the house, what rights will the new spouse have in the home, and will those rights override your daughter's name on the title? As I said in the original post, it's best to start with a goal (i.e make sure your child inherit) and then look at all available options to see what will work best.


    2. Thanks, Lynne for this very helpful reply. I'm already overdue for seeing a lawyer so will act on that today.

  3. Could you please explain this:
    " adding the kids' names to the title of the house no longer works. The house still goes into the estate despite the joint names."

    Everything I have read indicates that when a parent adds a kid to the house (right of survivorship), after the parent dies the house automatically then belongs to that kid. (not really a 'kid', probably middle-aged by this time).

    This would be the first I heard of anything different, but I admit I never know where to look.

    Also, what would be the point, then, of adding a kid to the house deed if after the parent death it becomes part of the estate anyway?

    And further, why warn people off doing it if it makes no difference when they die for having done it?

    1. The things you are reading used to be right. It all changed in 2007 with two cases from the Supreme Court of Canada, one called Pecore and the other called Saylor.

      Now the rule is that if a parent adds a child or children to an asset, the asset is considered to be held in trust for the estate and does not go to the child. This only changes if there is independent evidence that the parent actually did intend for the asset to go to the child for that child's own use. If it was only put into joint names to avoid probate or for convenience, it does not go to the child.

      People continue to add kids to the title because they too have read things or heard things that lead them to believe it's a good estate planning move. Those articles are either from another jurisdiction, are out of date, or are simply wrong. It doesn't help that some holders of assets such as banks are being reluctant and slow to apply the new rules and are giving inconsistent information to consumers.

      I warn people off doing it because having the kid's name on the property causes confusion and resentment among the kids. It causes delays while they try to figure out how a will that says they each get an equal share works when one gets the house. It ends up with extra legal fees as they fight about whether the one on title took advantage of the parent. The one with the name on the house tries to get the estate to pay for the tax hit they've incurred and the others refuse. It's usually a mess, and it often takes a lawsuit to figure it out.


    2. Thank you for this kind and helpful reply. It clarifies a lot, and will be useful in future to others I am sure. We now have something to "look up". :-)

    3. You're welcome. A good place to do free legal research is, which is run jointly by the provincial law societies.


  4. Can you confirm that "Adding the kids names to the deed never works" in our situation. My husband and I purchased a cottage in joint ownership. Our principal residence is in the city. A few months after purchased we added our two adult children to the ownership as joint owners. The intent was to allow our children to jointly own the cottage upon our death avoiding capital gains tax as we have seen so many cottages being sold as the children cannot afford to pay the tax. Our lawyer indicated on the new title that the reason for the transfer was for estate reasons. Are we now at risk?

    1. I can't give advice to someone when I haven't seen their documents and I know nothing about them, but I can comment on how the general rules should apply. I find the phrase "for estate reasons" to be utterly useless, as it can be taken to mean pretty much anything. The joint ownership question turns on whether you as parents intend for your children to own the cottage for their own use, or whether you intend just to avoid probate fees. Seems to me that either of those things, even though legally they are opposites, could be described as "estate reasons". In my view, you're at risk anyway because you have two extra people on your title, either of which could cause you to lose your cottage due to their divorce, car accident, or being sued. Also, no matter how many people you add, you are not going to avoid capital gains tax on your cottage. Adding people will have no effect on that. If the kids can't afford to pay the capital gains tax on the cottage and the cottage is not available to be sold, then other things in the estate will have to be used to pay the tax. If avoiding it was that easy, everyone would do it.



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