In Vancouver, BC, a contentious situation recently unfolded at a local housing co-op when a man, one Mr. Mihaljo Tusa, married a terminally ill woman, his sister-in-law, only weeks before her death apparently to gain occupation of her co-op housing unit. Tusa’s newlywed spouse was Ms. Margaret Crysler, whose sister Eileen had been in a romantic relationship with Mihaljo before (and possibly during) the marriage. The deceased Margaret’s son alleges that the marriage was manipulated by his Aunt Eileen and Mihaljo to secure possession of his mother’s co-op unit. He expressed concerns about his mother’s mental capacity to consent to the marriage given her deteriorating health.
Following Margaret’s passing, Mihaljo refused to vacate the property, prompting the co-op to commence legal action seeking his eviction. Court documents reveal that Tusa and Eileen had applied for co-op membership earlier in the year, but were not approved. Despite the co-op’s attempts to regain possession of the unit after Margaret’s passing, Tusa declined to leave, leading the co-op to file a petition in the BC Supreme Court seeking immediate possession of the unit, compensation for unpaid charges, and damages for trespassing.
According to the co-op’s petition, every member of the Kalso Gardens housing co-op must sign an occupancy agreement wherein they agree that their death counts as a “deemed withdrawal of their membership,” such that there is no possibility for inheritance of a member’s unit. The occupancy agreement also explicitly states that family members cannot take possession of a member’s unit upon their death. As such, Mihaljo’s plan to gain inheritance of the unit through marriage was based on a misunderstanding of the nature of Margaret’s legal interest in a co-op unit.
While this may seem like an uncommon situation, co-op housing units are not the only type of property that can be subject to restrictions on transfer when someone dies. One of the most common types of property that may be subject to transfer restrictions are shares of privately held corporations. For example, a shareholder may be obligated to give the corporation or fellow shareholders a right to buy back their shares upon their death. If this is the case, a will-maker will not be able to include these shares as an outright gift to their beneficiaries in their will.
As such, it is critical during estate planning that you and your lawyer explore whether any assets you wish to bequeath to someone else may have restrictions on their transfer. If certain assets are restricted, there may be a possibility of obtaining advance consent to allow your chosen successors to inherit them, or else you can arrange your estate in a way that factors in the inability to transfer such assets. Accordingly, it is important to know whether any assets are subject to transfer restrictions in advance of completing your estate planning; this will help avoid disappointing your beneficiaries or ending up with an estate embroiled in litigation.
As a final note, it is generally not advisable to marry someone in a last-minute attempt to inherit their assets, whether those assets are subject to transfer restrictions or otherwise! Don’t leave succession planning up to chance – get in touch with partner Zachary Murphy-Rogers, or another member of Clark Wilson’s Estates and Trusts Group for all your estate planning needs.