Beyond the core services, several key considerations can significantly impact the effectiveness and efficiency of your real estate plan. Estate planning lawyers can address these proactively to prevent future complications.
1. Co-Ownership Structures
How you own your real estate (e.g., sole ownership, joint tenancy with right of survivorship, tenants in common) has significant implications for your estate plan.
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Joint Tenancy with Right of Survivorship (JTWROS)
In joint tenancy with right of survivorship, when one owner dies, their interest in the property automatically passes to the surviving joint owner(s), bypassing the will and probate. This can be a simple way to transfer property to a spouse or child. However, it can also have unintended consequences, such as exposing the property to the surviving owner’s creditors or limiting your ability to direct your share of the property in your will. An estate planning attorney near me in Toronto can help you understand the full implications of JTWROS for your specific situation.
As tenants in common, each owner holds a distinct, undivided share of the property. Upon the death of one owner, their share does not automatically pass to the co-owners; instead, it becomes part of their estate and is distributed according to their will or intestate succession laws. This structure offers more flexibility in terms of directing your share of the property, but it also means the property will go through probate. If you’re searching for an estate planning attorney near me, our team can advise you on the best ownership structure for your real estate, considering your goals for control, flexibility, and probate avoidance.
2. Mortgages and Liens
Existing mortgages or other liens on your real estate must be considered in your estate plan. Your estate may be responsible for satisfying these debts.
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Your will should address how any outstanding mortgages or liens on your real estate will be handled. Will your beneficiaries inherit the property subject to the debt, or will your estate be responsible for paying it off? An estate planning attorney near me helps you plan for these contingencies, ensuring your beneficiaries are not burdened with unexpected financial obligations. This may involve ensuring sufficient liquidity in your estate or exploring life insurance policies to cover outstanding debts.
Mortgage life insurance can be a valuable tool to ensure that the mortgage on your property is paid off upon your death, leaving your beneficiaries with a debt-free asset. The estate planning lawyers can discuss the pros and cons of such policies as part of your overall financial and estate plan.
3. Foreign Real Estate
If you own real estate outside of Canada, specific planning is essential to address varying legal systems, tax laws, and probate requirements.
The “lex situs” principle dictates that the law of the jurisdiction where the property is located governs its transfer. This means that a separate will for foreign real estate may be necessary, or your Canadian will may need to be carefully drafted to comply with the laws of the foreign jurisdiction. The estate planning attorney helps you navigate these complexities, potentially engaging local counsel in the foreign country if required, to ensure a smooth transfer of your international real estate.
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Succession Laws and Forced Heirship
Some countries have “forced heirship” rules, which dictate how property must be distributed among certain family members, regardless of your will. This can conflict with your Canadian estate plan. An estate planning attorney near me can identify such rules and help you strategize to mitigate their impact on your desired distribution of your foreign real estate.
4. Business Succession and Commercial Real Estate
For business owners, commercial real estate often forms a significant part of their assets. Integrating business succession planning with your personal estate plan is crucial.
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Shareholder Agreements and Partnerships
If your commercial real estate is held within a corporation or partnership, the relevant shareholder agreements or partnership agreements will dictate what happens to your interest upon your death. The estate planning attorney ensures these agreements are consistent with your overall estate plan and that your real estate assets are treated as intended. This includes reviewing buy-sell provisions and valuation methodologies.
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Valuation of Commercial Property
Accurate valuation of commercial real estate is vital for estate tax purposes and equitable distribution among beneficiaries. The estate planning attorney can assist in coordinating with qualified appraisers to ensure proper valuation of your business and real estate assets.
5. Digital Assets and Real Estate
While often overlooked, digital assets can have a connection to your real estate, such as online property management accounts, smart home system controls, or digital records of property deeds.
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Access to Digital Information
Ensuring your executor or attorney has access to crucial digital accounts related to your real estate is becoming increasingly important. This includes passwords for online banking related to mortgages, utility accounts, or property management software. An estate planning attorney near me can help you create a system for securely documenting and sharing this information with trusted individuals.
Many important real estate documents, such as property deeds, surveys, and insurance policies, are now stored digitally. We advise on strategies for ensuring these documents are accessible to your estate trustee and beneficiaries, whether through secure cloud storage or other means.
6. Incapacity Planning for Real Estate
Planning for potential incapacity is as vital as planning for death. Your estate plan should ensure your real estate can be managed if you become unable to do so yourself.
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Powers of Attorney (Revisited)
As discussed earlier, a power of attorney for property is paramount for real estate. It allows your chosen estate planning lawyer to manage your property, including paying bills, collecting rent, and even selling the property if necessary, without court intervention. This foresight prevents your family from enduring lengthy and expensive guardianship proceedings.
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Contingency Planning for Management
Beyond the legal document, an estate planning attorney helps you think through practical contingencies. Who will physically manage your rental properties? Who will oversee repairs? Establishing clear instructions and backup plans for the practical management of your real estate during a period of incapacity provides immense peace of mind for you and your family.
