Parent-Child Joint Ownership of a House in Canada

Clients often ask me if they should add one or more of their adult children on the title of their homes, with the benefit being they would avoid probate fees on their home when they pass away. On a $2,500,000 home, that is a $35,000 savings, which understandably is a large enough amount to make it worth planning around.

Transferring Ownership of Property From Parent to Child in Canada

One of the issues to be aware of is that by adding an adult child to the title of your home, you could be jeopardizing the tax-free sale of the home. This alone could far outweigh the probate savings, not to mention the additional risks to the home if the adult child were to go through a divorce or bankruptcy.

Another issue to keep in mind is how you would equalize the inheritance for your children if only one of them were on the title of the property. If the majority of your wealth is in your home, you may not have enough other assets to provide an equal inheritance to each child.

With the additional costs and risks noted above, I most often recommend not adding adult children on title and instead having your home pass through your estate. Instead of focusing on probate savings, clients are better off reviewing income tax planning strategies in their estate planning, as there are greater potential savings when you compare the highest income tax rate of 53.5 per cent to the relatively low probate fee of 1.4 percent.

In my video blog this month, I cover the reasons for my recommendations as well as the risks you need to be aware of when completing your estate planning.

Related: Get Smarter About Money: 5 Tips to Get You On Track


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