Jan 122011
 

By Rose Pellar, B.A.S., LL.B.

Think with your head, not your heart

Think with your head, not your heart

Too often, an individual will put his/her partner’s name on a property when the partner has paid absolutely nothing or very little towards the price of the property. This sounds rather romantic and the rationale generally is – we’re committed to each other and we want to share everything.

Unfortunately, as a family law lawyer I deal with those whose dreams have been shattered and the financial fallout can be devastating. The parties who once were so much in love are now in conflict. Although the partner who invested very little or nothing knows that morally he/she is not entitled to share in that property, he/she may well insist on an equal division. Legally, the assumption is that if his/her name is on title as joint owner, he/she is entitled to 50% of the value. Arguments can be made to the contrary but not without significant legal costs. At the end of the day, it might be more economical to concede to some buy out, rather than to pay huge legal fees and then still having to pay a sum out to an undeserving partner.

To those of you who have not committed the mistake of adding your partner’s name on title, my advice is don’t. If you are both putting in money to the investment, by all means add his/her name to the title but make the ownership “tenants in common” and have it state the percentage of ownership according to your respective cash outlay. If the percentage ownership is not stated (e.g. 60% to you, 40% to your partner) then it is assumed to be 50/50. Do not put the ownership in joint tenancy, because if one person dies, then ownership goes to the survivor. In “tenants in common” ownership, each party can deal with his/her share separate and apart from the other person. For instance, if you own 50% of the property, you can leave your 50% share to anyone you wish in your Will. Of course, it will likely mean that your partner will pay out the value of your 50% share to your beneficiaries rather than have your beneficiaries own the property along with your partner.

If you wish, you could will your share to your partner but at least give some thought first to protecting your investment just in case the relationship does not work out.

Rose Pellar, B.A.S., LL.B.

Rose Pellar, B.A.S., LL.B.

Regrettably, when real estate lawyers are asked to put title of a property into your and your partner’s name, they seldom ask questions which could help to protect each of you in the event of a breakdown of a relationship. Likewise, when financial advisors are requested to add a spouse’s name to an investment, which you may have owned from before marriage, or from an inheritance, they seldom know enough to advise you against doing that or to suggest that you should speak to a family law lawyer prior to doing so.

You can still love with your heart, but do think with your head..

Rose Pellar, B.A.S., LL.B.
Barrister & Solicitor, Notary
Pellar Family Law Professional Corporation

www.pellarfamilylaw.com