QUESTION: Tax Fighter Dear Tax Fighter, Suppose you decide to put little Johnny on the deed to your house. Yes, when you pass away, you will avoid the Probate Fee, but have you thought about the following?
1. You won't be able to sell or mortgage your property without his consent. If you need to get your money out, you better hope you're still getting on with Johnny!
2. If Johnny gets sued or into a family dispute, his creditors or spouse may argue that his half of the house is one of Johnny's assets that should be used to pay his debts or settle his divorce.
3. If Johnny doesn't live there, its not his principal residence for tax purposes. If the two of you sell it, he may be responsible for capital gains taxes on his half of any increase in value since he went on title.
4. If you are getting a Senior's Tax Rebate on your property taxes, technically that would be canceled on Johnny's half - unless he's a senior, too!
5. If Johnny goes bankrupt, or has to rely on Welfare or a Disability Pension, it is possible that the authorities would require him to sell his share of your home.
WOW! All these problems to think about just because you want to avoid a Probate Fee that really isn't so much anyway. For example, Probate Fees on a $100,000.00 estate are $1,375.00.
REMEMBER, Your own circumstances are unique and, perhaps for some, the transfer is a good idea, but proceed carefully.....you might just outsmart yourself instead of the government!
QUESTION: Cheapskate Dear Cheapskate, Yes, it's conceivable that you could do it yourself, but most people cannot. Some can fix their cars, but most of us can't and would be better off if we decided not to try and end up in a worse mess.
Being a Country Lawyer, I often have to deal with "homemade wills". I remember one where a fine old gentleman wrote that "my house and contents goes to my wife and everything else to my son". He probably felt that he had done his will successfully and saved $100.00 in legal fees.
The problem was that he kept his money in a jar in the kitchen. Naturally his wife thought it was "contents" and his son thought it was part of "everything else". What the old gentleman thought, no one knows. His family had to get different lawyers, and each spent much more than had been saved by a "homemade will".
A property sale is even more complex and trying to do it yourself may be like deciding to fix your Jaguar yourself. Most cottage sales would be completed by a lawyer for $500-$600.00.
You're right that on other matters legal fees can seem to grow and grow. As I tell my clients, lawyers don't sell shoes or groceries. We sell time. When it comes to litigation, it is often impossible to tell how much time a case will take. Hence the dreaded hourly rate, perhaps up to $200.00 an hour.
For the most part, I prefer to send litigation clients on to an expert. We are often asked to stay involved on a consulting basis, just to be sure that everything continues on track and at a fair price.
Even if the final bill can't be determined, you are entitled to an estimate, and to know how far in you are at any one time.
QUESTION: Senior Citizen Dear Senior Citizen, One of the best gifts you can give to your family, is to take a little time to make things easier after you are gone or unable to handle your affairs.
Even if you don't have many assets, there will be matters to look after when you're gone. Your executor is the person you pick and designate in your will to arrange for your funeral, to receive and distribute your personal items and your final cheques.
If, as you grow older, you become unable to handle your financial matters, it is important that you have chosen the person you want to do it for you. The person you pick in your "Financial Power of Attorney" will then be in charge. If you don't have a Power of Attorney, the Government, through the Public Trustee, will become involved, or your family will have to go to Court to get permission to take the job on.
Death is one of the two famous inevitabilities. Do you want to be kept alive on a machine or let go mercifully? You may wish to put a "Living Will" provision in your "Personal Care Power of Attorney", to let your family know your thoughts. Believe me, they will be glad to know how you feel on this issue, instead of being left wondering if they did the right thing.
This section is set up as a Most Frequently Asked Questions format. Have a look at the question list, and click on them to find the answers straight from Brad!
1. HOW TO BEAT PROBATE FEES
The government is pretty good at getting "its bit". Sometimes trying to avoid tax can leave you outsmarting yourself.
2. HOW TO BEAT LAWYERS' FEES
You may think that, as a lawyer, I'm somewhat biased, but I think that even legal fees can be good value. This is particularly true of the two examples you use.....a will and a simple sale.
3. I DON'T HAVE MUCH. DO I NEED A WILL AND A POWER OF ATTORNEY?
YES.
4. WHAT IS WITH THIS TWO PAGE DOCUMENT MY REAL ESTATE AGENT WANTS ME TO SIGN WITH ALL SORTS OF QUESTIONS ABOUT MY HOUSE?
