I smell a nightmare...
June 8, 2021 2:06 PM   Subscribe

My mother lives in NB, Canada and I live in ON. She's suggesting she add me to her bank account and home ownership as she believes this will ease any transfer after she passes. I think it will affect my taxes. What's the best move?

My father passed away from Covid and my mother (who is 80) was the executor of his will. She found pretty much every aspect of it to be a nightmare -- especially if it involved the government, or the bank.

Concerned that when she passes I'll experience similar difficulty, she's suggested she make her accounts joint accounts with me and that she put me down as co-owner of her house. Does home ownership and a sudden cache of cash on paper not affect my taxes prior to her passing?

If not, the bank is insisting they can only do this if I personally fly down to NB and do it with my mother in person. I found this stipulation to be rather bizarre. Their declining to do it for her when she went in solo (prior to telling me about it) is probably one of the reasons she hates dealing with the bank.

Any advice appreciated. If it matters, I'm a renter in Toronto and own no land or houses or any other pricey assets. Her bank is TD.
posted by dobbs to Law & Government (17 answers total) 6 users marked this as a favorite
My father passed away this year and I’m the executor of his estate. I agree with your mom that it is a pretty big pain in the ass to settle the estate without a joint account. Everything would be so much easier for me if my father and I had one. You don’t need to keep a lot of money in there but it will easily allow you to pay bills and deposit any checks (you will need to do this even if the estate is small). I can’t speak to the house part but on the joint account I would strongly recommend having her add you or start a separate joint account. I can’t imagine there would be major tax implications for you with a regular checking or savings account.
posted by scantee at 2:19 PM on June 8 [4 favorites]

My understanding is that it will not have any affect on your your taxes but it will make accessing her assets easier. Basically when she dies you become 100% owner immediately as those assets are outside her estate. My friend actually just had her mother die in NB and was not joint on anything and it was a bit of a nightmare to get the estated sorted (and she was the only person inheritaing anything but the paperwork is still continuing on). The only implication I could see for you is that you may not be able to access a first-time home buyers incentive (which has to be repaid anyway). And if her bank is National you may be able to do it at a Branch in Toronto but NB can be rather old-fashioned.
posted by saucysault at 2:23 PM on June 8 [2 favorites]

How registering your adult child to the title of the family home can cost you (CBC)
Shared Ownership of Property, Important Considerations (Seniors First BC)
Why adding your kids to the house title will cost you
An awful lot of parents have added their children to the title of their homes without getting legal or accounting advice first (Estate Law Canada blog post)

(RE: TD Bank. It's not a "bizarre" stipulation; altering legal docs/contracts to include another person adds legal responsibility of some kind to that person; of course the bank wants to be sure you agree to the update.)
posted by Iris Gambol at 2:32 PM on June 8 [3 favorites]

Ask a lawyer who does estate work for advice on what will make the process as sooth as possible.
posted by theora55 at 2:32 PM on June 8 [4 favorites]

Can’t answer your question about homeownership, but my mother also banks through TD and I’ve been added to her chequing and savings accounts as a joint account holder and it hasn’t affected my taxes at all. She’s the one who gets the tax form for the little interest she gets on the savings account, but that’s it.

Another thing I might recommend would be to put yourself as a secondary contact person (I can’t remember what it’s called, technically) on some of her bills. I’ve done that with Telus and her home insurance company, for example, and it’s made it easy for me to contact them if there’s been a problem (not that there has been) without a lot of the red tape.
posted by VirginiaPlain at 2:33 PM on June 8

I don't have the answer to these questions, but these are some of the things I would investigate:
-- what are the rules on who pays taxes on the interest earned from joint accounts? Not likely to matter for a chequing account but might for savings or investment accounts
-- land transfer taxes, are they triggered by this event?
-- homebuyers grant, if you have any plans to buy your own home
-- does this trigger a deemed disposition / capital gains event for her

Also: if you are the only heir, check that she has listed you as the beneficiary on any insurance policies and investment accounts that she legally can. They were likely set up with her husband originally, and should be changed now if they can be
posted by jacquilynne at 2:33 PM on June 8 [1 favorite]

Regarding the cash in a joint account, in terms of Canadian federal and provincial taxes, that cash sitting there isn't earning much in the way of interest these days -- my understanding as a Canadian taxpayer (but non-accountant) is that it that cash would only be a tax issue if there were realized capital gains, substantial interest (i.e., barely a thing these days if we're talking about a plain vanilla chequing account), or dividend income on it. So I would personally see the cash part of your question as a non-issue if I was in your shoes. Basically, what scantee said above.
posted by mandolin conspiracy at 2:35 PM on June 8

Also, even if you have a minor tax uh-oh from interest in that account, the worst case scenario for you is that you'll get a polite notice from CRA saying you have to send them a few bucks.

CRA isn't the IRS -- they're not going to do something like freeze accounts suddenly because you have a small amount of tax outstanding. In my experience, they're pretty mellow as such things go, with minor discrepancies like that should one arise.
posted by mandolin conspiracy at 2:39 PM on June 8 [1 favorite]

I was added to my father's TD account prior to his death. It made everything easier. I was not added to the house as that would have made things more complicated. Both decisions were made on the advice of my Canadian (ON) attorney and it worked out well for us. I did have to travel to Toronto to be added to the account, which makes perfect sense -- I needed to bring proof of identity and supply my consent via signature. A notary at the bank may have been involved? I can't remember.
posted by DarlingBri at 2:50 PM on June 8 [4 favorites]

If not, the bank is insisting they can only do this if I personally fly down to NB and do it with my mother in person. I found this stipulation to be rather bizarre. Their declining to do it for her when she went in solo (prior to telling me about it) is probably one of the reasons she hates dealing with the bank.

Speaking as someone who has worked for a couple Canadian banks, and has no patience for most of their bullshit, and believes that their profits should be more heavily taxed, there are actually some valid reasons for this.

The main one is that fraud against seniors (even by immediate family members) is totally a thing that happens, and when it does, it commonly occurs through joint accounts. I've attended internal seminars on fraud, and the bank's legal counsel walked through actual cases of children of older people using joint accounts to go out and buy themselves expensive items without their parent's knowledge or permission. These transactions got flagged for one reason or another (in one case, it was an advisor reviewing client accounts and wondering why the hell a cheque was cut from the account of 80-something client who not longer drove...to a Porsche dealership for the full price tag of a new Boxster).

So at a branch level, the employees are adhering to policies (and/or regulations) designed to prevent this. I hear you, though...it doesn't make it any less of a pain in the ass, especially when travel is involved right now.
posted by mandolin conspiracy at 2:55 PM on June 8 [7 favorites]

With the capital gains its possible you would come out behind if your mother added you as a joint tenant to her property (compared to the probate taxes that would be paid on the house otherwise), probably worth doing some sample calculations to see what the amounts would be either way. One thing for sure is that if you did go on the ownership of the house then you'd no longer be eligible for the first time buyers land transfer tax rebate in Ontario if you ever ended up getting a property here (currently up to $8,475 for properties in Toronto and $4,000 elsewhere in the province).

If your mother is worried about saving you some headaches when she passes then as long as she has a will and perhaps a list or spreadsheet of her various accounts or other assets then she's done her job. A will isn't even strictly necessary but it would make things a bit easier. Being on a joint account helps if you need access to it quickly but if you're OK with everything staying locked at the bank for a couple of months while the estate goes through probate then there's no advantage to it.
posted by any portmanteau in a storm at 3:05 PM on June 8 [1 favorite]

You might want to look into power of attorney.
posted by lulu68 at 3:14 PM on June 8 [1 favorite]

You can have her make the accounts POD (pay on death) or TOD (transfer on death). It's outside of probate. All you need is a death certificate and your ID, you get a check.
You can investigate having her change her house deed to "quit claim" to you. Talk to a lawyer.
posted by H21 at 4:06 PM on June 8 [2 favorites]

You and your mom need a lawyer in NB to make sure this is all done properly. It shouldn't cost much if she just has the house and a bank account and you're her only heir.
posted by mareli at 4:52 PM on June 8

Seconding what H21 says—this is what my parents did earlier this year on the advice of an estate attorney. However, we’re in the US and I don’t know how this applies to Canada.
posted by bookmammal at 5:24 PM on June 8

I'm in the US, so I can't speak to Canadian probate laws, but I am a paralegal and agree with other suggestions to consult an estate planning lawyer. This is literally what they do for a living - help families sort out their financial lives ahead of time so it's easier to handle upon their passing. Also, I just got added to my parents' bank accounts, and yes, I had to go with them to get it all done. We all had to sign our names a billion times and present two forms of ID, so that's likely why you were asked to go in person. I appreciate their thoroughness, but it's a pain in the ass at first.
posted by jhope71 at 5:52 PM on June 8 [2 favorites]

My grandparents did something like this with my father (they actually gave him the property they lived in, with a life interest stipulation). It was exceedingly unhelpful when my father unexpectedly predeceased them, and the grandchildren inherited the property, as we hadn't been involved in any of the discussions. We had to pay a substantial amount of inheritance tax in our jurisdiction on the property which was unexpected and the lawyer they had used for the transactions was completely out of her depth.

Some things we found was that the property affected any first-time buyer help we might otherwise have been entitled to. It sounds like the money and home will be legally yours (or a share of them) which might affect any debt-related proceedings that were held against you. Similarly, if you needed to access public assistance of any kind it may be counted against you.

Having said that, this isn't in principal a bad idea, but it's worth making sure that you do it in the right way. If not, acting as the executor of the kind of fairly straightforward estate it sounds like your mother would leave is work but it's doable if you are not too bad with paperwork.
posted by plonkee at 1:52 AM on June 9

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