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JOINT TENANCY OR TENANTS IN COMMON

TREE DESTROYS DOCK- NO REMEDY

COMPLYING WITH THE WILLS ACT

TRANSFER TO THE NEXT GENERATION – A POSNER PRESENTATION

JOINT TENANCY OR TENANTS IN COMMON

I often have to advise clients on the issue of how to take title either for the client or for a relative of the client. The issue arises when people are buying a new home or cottage or if they are contemplating an inter-family transfer.

In my experience, the easiest decisions to make are those situations where a husband and wife are buying a new home or even a second home. I generally counsel families in this kind of situation to have the title made out or engrossed in the names of the two of them as joint tenants. What that means is that on the death of the first party, the share of the deceased automatically goes by law to the surviving joint tenant. This is so irrespective of any direction made in the will to the contrary. All jointly held assets devolve on death to the surviving joint tenant. End of story. If however, these assets or any of them were held in the names of the husband and wife, not as joint tenants but as tenants in common, the reverse is true. That is to say, where a husband and wife own a cottage as tenants in common, upon the death of the husband (if he is the first to go), then the share or interest in the property is governed by the will of the husband. Thus, if that husband had willed his share to the Salvation Army, his share would be then transferred over to the Salvation Army who would then own an undivided ½ interest along with the widow who also would continue to own her original ½ interest. This kind of situation applies not only to husband and wife but to any kind of tenancy in common.

If, you ask, what impact should this have on my case, you should reflect on the following. On the one hand, if you own an asset at your death, especially where real property is concerned such as a home or a cottage, then there is the process of probate to deal with and possibly to pay tax on. Thus, if you and your spouse own a cottage as tenants in common, on your death, the value of the share in the cottage at your death will be used as the amount of your asset and taxed at the rate of $6.00 per thousand in Manitoba and $5.00 per thousand in Ontario (only on the first $50,000.00 and $15.00 per thousand thereafter) will be applied. The process of probate is an open one so that your statement as to assets is open to the world to see. But, if you go the route of joint tenancy, you never have to worry about this aspect of your estate at all.

On the other hand, what will happen if you own a cottage and leave it to your three children as joint tenants? The winner is the last one to die. As each child passes on, that share held by that child is extinguished and any rights his wife or children would have, are gone with the death of their husband and father. This kind of scenario is not likely what you wanted to happen. Of course, if you leave it to the three children as tenants in common, you are faced with the fact that your deceased’s child share will be governed by what he or she has said in his or her will. Thus, your grandchildren or daughter-in-law may step into the shoes of your deceased son and that may not be such a good idea. These are all considerations that demand careful thought.

Generally I counsel my clients who are transferring the property to adult children, that the better route is to go by way of tenants in common. I acknowledge the requirement of probate. I also recognize that the wife or husband will often become the owner with in-laws and that is not always workable but I also know this is probably the most fair method of ensuring that each of your children receives an equal share and is not cut out by the working of the law.

What I can say for sure is that this is a thorny issue It is an area of concern for most people who are looking to transfer property to children as well as in other instances. I suggest a meeting with your lawyer (as in me) to review this issue before making a move too quickly.

TREE DESTROYS DOCK- NO REMEDY

A recent case in British Columbia about a tree falling down into a dock and causing damage to the tune of $35,000.00 was dismissed at trial. The court through the opinion of Mr. Justice Frank Maczko was clear that it would be unreasonable to require professional inspection of all of the trees in the forested part of the Province. What the judge actually said was “if this court were to impose such a duty on British Columbia homeowners, a new industry would be created”

What happened here was that a tree of 125 years over 180 feet in height located on the property of Kenneth Northrop unexpectedly fell and smashed into the dock of the neighbours, Ian & Evelyn McNee. This took place in Pender Harbour on the Sunshine Coast of Vancouver on May 1, 2003. The cause of the fall was traced to tree rot. Now, not so surprisingly Mr. Northrop did not know that he had a tree with tree rot or that the tree posed a risk nor did he have any expertise in trees. Even if it had occurred to Northrop to examine his trees, this one was situated on a very steep embankment. The surrounding area was heavily treed and not easily accessible from his home.

Now, it is a fact that there are cases where owners can be found liable for injury or damage to others nearby and in fact even passing motorists or others walking around the area. However, and it is big however, in those instances, the trees were actually located near or adjacent to busy highways or corridors of pedestrian traffic. The judge said: “here, the area is densely forested. The tree was not easily accessible. The signs of decay, even if seen by a non-expert, would not have alerted an ordinary person to the possibility that the tree was a hazard”.

The judge took the view that the law did not impose on B. C. landowners a duty to inspect their forested property. What can be expected is that homeowners check their trees that might be close to busy roads where there is frequent traffic. Naturally, if you uncover a problem, then you have the obligation in law to correct it.

Now, the question is whether this standard as defined in B. C. would apply in Manitoba or Ontario.

COMPLYING WITH THE WILLS ACT

There are times when it is important to make sure the “T’s” are crossed and the “I’s “ are dotted. Such was the situation in a recent case in Saskatchewan referred to as Buliziuk v Pishnot Estate (The Public Trustee).

In that case heard in the Court of Queen’s Bench, the court heard evidence that the applicants, who were very good friends of the deceased, had applied to be appointed as the executors of the Estate in place of The Public Trustee who had applied saying that there was no real will, with the result that the deceased died intestate. The applicants tried to convince the court that there was a document meant to be the last will and testament which the court should accept as valid.

The facts as disclosed in court were that the applicants knew the deceased since 1996 and when the deceased became ill, these applicants attended at her home three times a week to help her. Later, in 1999, the deceased suffered a fractured hip and was hospitalized and these same people came to see her every day, and looked after her home and cat. After her release from the hospital, the deceased continued to be in close contact with the applicants. The deceased indicated verbally and in fact this desire was actually recorded and subsequently transcribed that she wanted the applicants to have all of her estate. In fact, the deceased met a lawyer and advised him of that intention. The lawyer prepared the will for the signature of the deceased but she never got around to signing it and she died in 2000.

The actual estate was only worth $44,000.00 but the Public Trustee intervened since it appeared that there was no real will. Where there is no real will the assets of a deceased are distributed according to the laws of consanguinity- as in blood relationship. The applicants took the position that the notes of the lawyer were sufficient to allow the court to order that the draft will could be admitted to probate with the result that the applicants would be the beneficiaries as opposed to some relatives. The argument was based on a section of the Wills Act in Saskatchewan.

The application was dismissed. You might ask how that could be given the real intention of this Mrs. Pischnot. The court examined Section 37 of the Wills Act which allows the court to declare that even though a document does not meet the standards of a will to be effective such as in this case where it was not signed, the will was still effective. This court in Saskatchewan however did not agree. It stated that the discretion given to it by S.37 of the Act did not go so far as to allow it accept a document that did not comply in any way with the formal requirements of the Wills Act. That there was no signature was fatal to the case. The fact that there were solicitor’s notes and that there was a draft will were not enough to overcome the failure to have a signature anywhere. The court stated that the evidence of the applicants was truthful and the judge was clear that the court had no doubt that the deceased did want to leave all of her property to the applicants. But, there was total failure to leave this estate by legal means. Hence, the applicants were denied this entitlement intended for them. This was not just crossing a” T “or dotting an “I “but rather something far more important- no signature at all.

TRANSFER TO THE NEXT GENERATION – A POSNER PRESENTATION

I recently took part in two presentations to invited guests on the subject of the transfer of the cottage to the next generation and the issues involved in this step. This seminar was given by me through the Firm of Richardson Partners financial Limited and in particular with Greg Bieber as the organizer of the session. Actually we had two of these sessions, one of them in March and the other in April, both at the Fairmount Hotel over breakfast. I tried to talk about all of the issues involved in this scenario and I will say that those in attendance were all cottage owners facing this question or children of cottage owners worried about this same problem. If you are interested in attending another of these programmes, please contact me and I will arrange for you to get an invitation to the next one.