Recently, a client came to me regarding the purchase of a family cottage. The client was obviously excited about his new purchase, and wanted advice as to whether he should include his minor children on title. As his children would ultimately inherit the cottage, he thought it would be a good idea to include them on title from the start. My client knew that if his children were joint owners, they would continue to own the cottage after he died by right of survivorship. Not only would capital gains taxes be deferred (until the children ultimately disposed of the cottage), but the cottage would not be included as an estate asset for the purposes of calculating the estate administration tax (i.e. probate fees). It seemed like the perfect plan.
However, despite my client’s best intentions, my advice was not to put his children on title. The problem was that if the cottage had to be sold or mortgaged while his children were still minors, a court order would be required. Moreover, The Children’s Lawyer would have to be put on notice if such a court order were requested. Finally, the court would only grant an order when it was of the opinion that the sale or encumbrance of the cottage was necessary or proper for the support or education of the children, or would substantially benefit them. In the end, it was better for my client to simply wait until his children were adults before transferring his interest in the cottage to them.