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Clarity the key when holding joint property Sandy Cardy is senior vice president of tax and estate planning at Mackenzie Financial Corp. Adrian Mastracci is a portfolio manager and financial adviser at KCM Wealth Management Inc. in Vancouver. Parents often ask about holding an investment account or property jointly with an adult child. There are valid reasons to pursue this path,path, free shipping cheap Pistons jerseys along with some pitfalls to consider. We believe this estate planning topic is very important to Canadians. Clients ask the same questions in our respective practices. They raise the same issues. They have similar misunderstandings. Accordingly, we've combined our views into one joint commentary. A popular estate planning strategy is for a parent to register an asset, such as an investment account or family cottage, in joint name with an adult child. Joint ownership is generally set up for two reasons: to avoid probate fees since such an asset passes by right of survivorship to the surviving joint owner and therefore does not form part of the estate of the deceased; or for convenience so the child can help the parent with management of the asset. While joint ownership can accomplish both these objectives, these arrangements can be fraught with complications. If not properly set up, putting a family home, investment account or other asset into a joint name with an adult child can result in unintended and unhappy consequences. In addition, there are risks in putting a family home in joint ownership with a child. In fact, putting assets into joint ownership with your adult children is not a step to be taken lightly. On May 3, 27, the Supreme Court of Canada reviewed and clarified the law regarding joint assets. Canadians have to realize that assets held jointly between parent and child willwill cheap Pistons jerseys free shipping not automatically become the child's assets when the parent dies. True joint ownership usually includes the right of the survivor of the joint owners to receive legal and beneficial title to the entire asset when the other owner dies. But, in law, there is a distinction between being the person who has legal title the registered owner and the person with the right to the use and enjoyment of the asset (the beneficial owner). The registered owner may not always have the right to the use and enjoyment of the asset. Instead, he or she may be holding the asset for the original owner's estate. This is often the case when a parent sets up joint ownership of an asset with an adult child. Until recently, courts would often rely on the legal presumption that the intention of an individual who jointly owned an asset, such as an investment account or vacation property with their adult child was for that asset to pass, by right of survivorship, upon his or her death directly to that child. As a result, the asset would not form part of the estate of the deceased parent and would thus not be subject to probate fees. However, in light of two recent SupremeSupreme cheap Pistons jerseys from china Court of Canada rulings, unless there is evidenceevidence wholesale Pistons cheap jerseys to the contrary, it is now presumed, at least in the case of assets held in joint ownership by a parent and adult child, that the asset is being held by the surviving joint owner in trust for the parent's estate. As a result, it is crucial for Canadians to clearly document their intentions whenever they own assets jointly with an adult child. If the intention as to what is supposed to happen to the asset when the original owner dies is not clear, the asset will likely pass to the original owner's estate to be distributed in accordance with his or her will. Without the clearly stated intention of the original owner, many joint ownership situations are lawsuits waiting to happen and can split families apart. Luckily, with a little planning this doesn't have to happen. The best documentation of intention is a separate written record of intention. Having such a document will also help to avoid potential sibling disputes and costly court battles. Where a parent has transferred beneficial ownership of an asset to a child as a joint owner with the right of survivorship accompanied by a Deed of Gift evidencing the parent's intention that upon his or her death, the joint asset is to go directly the child there are other advantages and disadvantages Canadians need to be aware of. THE ADVANTAGES ARE: No probate fees will be payable with respect to that asset on death. The asset is removedremoved Pistons jerseys cheap from the scope of the Wills Variation Act in British Columbia. Ease of transfer the survivor will not experience any delay in receiving the asset on death. THE DISADVANTAGES ARE: Potential for loss of control over the asset by the parent. Potential to trigger immediate tax consequences such as capital gains or property transfer tax. Potential for future tax consequences to child. For example, if the asset is a principal residence and the child already has his or her own principal residence, the capital gain exemption may be eroded. Exposure of asset to claims made against the joint owner from creditors, or even spouses on marriage breakdown. The ability to income split by way of multiple trusts created in a will to save on income taxes or limit a beneficiary's access to the property may be reduced or eliminated.

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