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.

Dad passed away but the house was never transferred to Mom, now what?

Another reader has asked me a great question that should interest many of you. This particular situation arises more often than you might think. Here is the question:

I'm 30 years old and my father passed away when I was 13. My parents were married during this time. When my dad passed the house went to her and we have resided there since. Recently my mom was notified that her mortgage was paid off. Attached to this notice is what appears to be a summary of land title info. I noticed that the title still states his name, but I don't see hers anywhere. Is this a problem? Can we simply go down to the land titles offices and have this info updated?

It isn't a problem, since your Mom is still alive, but neither will it be as simple as "updating" the information.

I suggest you begin by clarifying the information you have. You said that it "appears to be" a summary of the title and that you don't see your Mom's name on it. Go to the Land Titles Office and find out for sure what is on the title. Take the summary with you to provide the legal land description. A search costs only a few dollars and it's essential that you know what you're dealing with.

If your Mom's name is not on the title, then she did not inherit it as a joint owner by right of survivorship. If your parents had been joint owners and the title had not been updated after your father passed, then both names would still appear. If she had been a joint owner then actually it would be just a matter of updating information. Your Mom could sign and swear (or declare) a very brief form, back it up with a copy of your Dad's death certificate, and that would be it.

As your Mom was not a joint owner and you said that the house went to her on your Dad's death, it sounds as if your Dad left a Will. Hopefully this is the case. My opinion is that the executor named in your Dad's Will will have to apply for probate in order to transfer the house to your Mom. This is not a matter of simply updating information; this is an entirely new transfer of title and I do not believe that it can be done without a grant or order of probate.

If your Dad did not leave a Will, your Mom will have to apply to the court to be named as administrator of the estate in order to get a grant from the court to transfer the property. If your Mom passes away while the house is still in your Dad's name, you'll still have to have a grant of probate or administration to deal with the house.

You might also take some time to check that other assets owned by your Dad were properly dealt with. Was there any other real estate, like a cottage or rental property? Were any RRSPs rolled over to your Mom? Are there investments or accounts still in your Dad's name? Was any life insurance naming your Mom collected?

Usually estates are set up so that when a husband or wife dies, the surviving spouse doesn't have to apply to the court for probate. Unfortunately, this leads many people to think that nothing needs to be done. As you can see, sometimes there certainly is something important to be done.

When there are mines and minerals in an estate, what does the executor need to know?

An individual may own a mines and minerals (M&M) title, particularly if that individual lives in a rural area. I often find that the procedures for dealing with the M&M title are less well known than those for transferring land. They can be tricky for executors to handle. In this post I want to give some basic information about M&Ms so that executors at least have a starting point.

M&M titles may be separate from ownership of the land from which the M&Ms are taken. An executor should search both the land and the M&M title to make sure he or she confirms the owners, and the form of ownership. If the M&M title is jointly held with a right of survivorship, it will go to the surviving joint owner as with any joint asset.

The transfer of ownership of M&M titles is done through the Land Titles Office (or provincial/territorial equivalent) in procedures that are very similar to the transfer of land.

When the M&M title is transferred out of the name of the deceased to a beneficiary or purchaser, there are tax consequences to the deceased. If it was land that was transferred, it would be a capital gain that was added to the deceased's last income tax return, but with a M&M title, it is not. The value has to be set differently. Usually the amount added to the deceased's income is somewhere between two and five times the annual income from the M&Ms.

The executor will have to check whether the deceased was involved in a Royalty Agreement or Lease Agreement for a development company or oil company to extract the M&Ms. Under an agreement, the deceased could be entitled to either royalty payments or annual lease payments, depending on the terms of the contract. The executor must determine whether there are any amounts outstanding that belong to the deceased, and must notify the development company of the change of ownership. Usually the companies are pretty good about providing the executor with the paperwork they need completed to make the change. The rights under the agreement are usually transferrable to the new owner of the M&Ms.

The executor may find that the deceased has a Gross Royalty Certificate for a share in a Gross Royalty Trust, though those are (fortunately) becoming more and more scarce. If there is a Gross Royalty Trust in existence, the executor should see a caveat on the title filed by a trust company. The executor will most likely want the help of a lawyer or trust company if there is a Gross Royalty Trust because the wording of the agreements is really critical in understanding the rights of the deceased. Generally speaking though, entitlements under Gross Royalty Trusts can be passed down to new owners.

To deal with any of these agreements or trusts, you will be required to go through the probate process first.

Don't forget to transfer joint title to surviving owner when one passes away

Most people realize that when one joint owner passes away, the other one - the surviving joint tenant - automatically owns the property. This right of survivorship is the main reason that people own property in joint ownership in the first place. However, many surviving joint tenants don't realize that the Land Titles Office isn't going to change the title to the property automatically. The surviving joint tenant has to ask them to do that.

In order to change the title from joint owners to the surviving owner, that surviving owner will have to fill in a brief document at the Land Titles Office (or lawyer's office). Along with the document, the Land Titles Office will require an original Death Certificate. It must be the government-issued Death Certificate and not the Funeral Director's Statement of Death. In the document, the surviving owner will say that the other owner has passed away, offering the Death Certificate as proof, and ask that the title be amended to show only one name.

I've heard a number of surviving owners and a few executors ask why they should bother. Here's why. Say Jack and Janet are married and they put their home into joint names. Janet passes away and her Will doesn't need to be probated because everything is in joint names with Jack. He doesn't bother taking Janet's name off the title. Years later, Jack dies and his executor tries to sell the house. Jack's executor can sign on his behalf because Jack's Will was probated. But who can sign for Janet? Her name is still on the title. Jack's executor would then have to get Janet's Will probated too because there is no longer a surviving owner.

That is assuming her Will can still be found and hasn't been destroyed. And assuming that she named an executor other than the deceased Jack. You can see how a simple transaction all of a sudden becomes REALLY complicated.

The best idea is to file the necessary document at the Land Titles Office as soon as may be practical after the death of the first joint owner.

Two steps to transferring real estate from an estate

I'm often asked about the mechanics of certain transactions under an estate. Probably real estate gets more questions than any other type of asset. In this post I want to describe the two basic steps that are involved in taking a piece of real property from an estate and selling it or transferring it.

Let's say that when Amelia dies she owns a house. Nobody else's name is on the title. Her executor, Sam, reads the Will and finds that he needs to transfer the house to Amelia's nephew. The first step Sam takes to deal with the house is called transmission. The property is being transmitted from Amelia to Sam as executor (NOT Sam personally). The Grant of Probate needs to be obtained first to take this step.

Sam completes a document called a Declaration of Transmission and files it at the Land Titles Office with some supporting items. Once the Land Titles Office processes it, they give Sam a new title, which shows that the house no longer belongs to Amelia, it belongs to the estate. The title will actually show as "Sam, executor for estate of Amelia". While the property is in the name of the estate, the executor is responsible for keeping it insured and secure, and paying the property taxes.

Now Sam can take the second step, which is called transfer. Sam will prepare a document called a Transfer of Land, again with supporting information and fees, and file that at the Land Titles Office. Once this is processed, the title will be in the name of Amelia's nephew and Sam will no longer have any control over the property.

The transfer could, in other situations, involve selling the property to someone outside of the estate. In this case, there is still a Transfer of Land used.

Enduring Power of Attorney must mention land

The current issue of the Calgary Real Estate News is carrying my article called "Enduring Power of Attorney Must Mention Land", which talks about what an EPA must contain in order to be used at the Alberta Land Titles Office. This is important for anyone who is named as the Attorney in their ageing parent's EPA as they may one day be called upon to sell or transfer the parent's home.

To read the article, click here.