We often hear about how we should be working on our “estate planning”. But what does that really mean? It is important to recognize that “estate planning” is about more than just making your Will. There are actually a number of factors that go into the creation of a successful plan. This article highlights a few key issues that come up often when working with estate planning clients.
Should I add my adult child onto title to my land?
Some key things to keep in mind if you want to add your adult child onto title:
- The transfer of property into joint names is irreversible unless all parties agree to the change. (This is largely because Saskatchewan operates under the “Torrens” system of land registration – which means that once a transfer happens, it is conclusive and final.)
- Once the adult child is added onto the title, that property now becomes open for seizure by creditors, or could be found to be “family property” subject to a division in a separation or divorce.
- If the original owner decides they want to sell the property, or mortgage the property, they now need to get the written permission from the adult child to do so.
- If the property is sold, consideration needs to be given as to what the tax consequences of the sale will be to the adult child. The original owner may be able to shelter some of the gain using the principal residence exemption (depending on what property is sold), but the adult child will likely have to declare the income.
- If the transfer of land to the adult child would otherwise be subject to GST/HST (i.e., farmland), it is important that the adult child be registered for GST/HST in advance of the transfer to allow for self-assessment.
- There is also a fee that needs to be paid to land titles when a name is added to title. It is important to factor that fee into the cost-benefit analysis.
Probate fee avoidance is one of the main reasons why we often receive requests to add an adult child to title. However, it is important to remember that probate fees are only $7 on every $1000 of value in Saskatchewan (and even less in many other jurisdictions). As mentioned above, there are other costs to consider when deciding to add a name to title. It is important to consider all the relevant factors (good and bad) before deciding.
How do I choose an executor?
Being an executor is a lot of work. When you are choosing an executor for your own estate planning here are some things to consider:
- Have you talked to the person and are they ok with acting? Keep in mind that the person you have named in your document is not obligated to act. At the time of your passing, they have the right to “renounce” or “refuse” to act. Therefore, it is a good idea to check in with the person you have named to find out whether they would be prepared to act.
- Where is the person located?
- If you want to name more than one person, how should they make decisions? Can they act independently, or should they act together?
- How complex is your estate?
- Are you in a blended family with a second marriage? Do you have other complexities such as the need for long-term trusts, or assets outside of Canada?
What other documents should I have in place?
Most people start their estate planning journey by thinking about their Will. But there are other documents you should also consider:
- Power of Attorney – this governs your property and your personal affairs while you are alive. It can be triggered to come into effect immediately or on the happening of a certain event (e.g. if you lose capacity)
- Health Care Directive/Living Will – this document governs your health care decisions when you are not able to speak for yourself.
- Adult Guardianship Order – if you have a child who has a physical or mental disability such that they can not make decisions independently or live independently, consideration should be given as to whether a guardianship order or co-decision making order might be required once the child reaches the age of majority.
The information in this article is not legal advice. We encourage you to consult with your legal advisor for advice specific to you.
This article was originally published in The Western Producer.