A convenient tool used for estate planning is to put property into jointure. In our blog, we have written about joint tenancies before. Joint tenancies are often seen between spouses, and as part of an estate plan, as between a parent and their adult child. However, because of the increasing cost of real estate in Vancouver, more and more baby boomers are using the equity in their homes to assist their children in purchasing their own home, while at the same time, giving the parent peace of mind that they themselves will be taken care of as they age.
Take the situation where mom who is widowed owns her own home without a mortgage. Her son is in his late 20’s and married with a new baby. Son can’t afford to purchase a home, and lives in a rented condo. Mom therefore offers to sell her home and purchase a fixer upper for herself and her son and his family. Son and his wife put their own money into renovating the home and making separate suites for mom and their family. Mother has peace of mind that she will be close to family as she ages and son has the ability to become a property owner.
The above type of scenario is not uncommon in many cultures but until recently, has not been the norm for western cultures. However, this type of arrangement is on the rise, more out of economic necessity than cultural imperative. Read about this in a recent article in the Vancouver Sun:
As far as estate planning is considered, the above arrangement can be convenient and economical, but is not without its difficulties. If the relationship(s) become strained, it may be difficult to disentangle the financial contributions of each family member. In addition, the mom’s hopes of being close to family while she ages may become impossible and new arrangements will have to be made. If there is more than one child, but only one child is a joint tenant with the parent, tensions may arise between siblings. While it may be uncomfortable, we recommend that such family arrangements be thought through carefully and, if necessary, a contract be entered to reflect each person’s expectations, rights, and obligations.