Savings may lead to conflict - Metro US

Savings may lead to conflict

Q. My mother is 87 years old and owns a house valued at $450,000 to $500,000.

My brother is currently living with her in order to help her out with day-to-day living. There are five siblings in total.

My mother’s will specifies that her assets are to be divided equally amongst her children.

We had considered transferring ownership to our brother but are worried about estate taxes and the ownership of the house after our mother passes away. Can you give us some guidance?

A: One of the most common methods of estate planning is to place one of the children of an elderly parent on joint ownership of the home.

In this case, your brother presumably does not own another residence and therefore there are no capital gains issues as he can declare it his principal residence.

As a joint owner, the property will automatically change ownership to that of your brother upon the death of your mother and will not become an estate asset. This should save approximately $7,000 in estate administration taxes.

The only real issue is your brother’s honesty and how he approaches his ownership after your mother’s death.

If he has no issue selling up and splitting the proceeds then it may be a possible estate planning strategy.

However, if this potential situation may lead to family problems and strife, you may want to consider this transfer to your brother very carefully.

There is nothing worse than a family torn apart by a battle over a late parent’s estate.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.

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