by Or Regev
In Episode 3 of the Hobbs Giroday Podcast I discussed three pitfalls to be mindful of when deciding whether to add your child on title to your property. One such pitfall is your child’s creditors will be able to file claims against your property; this can lead to a forced sale, an inability to refinance or other complications. The recent decision of Gully v. Gully, 2018 BCSC 1590 provides a good example of this, and a reminder that improper estate planning can lead to unfortunate, unintended consequences.
In 2015, as part of her estate planning, Ms. Gully added her son Steven on title to her property in Burnaby (the “Property”). Steven did not contribute to the acquisition of the Property meaning it was a gift. Ms. Gully also executed a Will which stated the following: “I declare that I contemplate naming my son and others as joint owners of some of my assets…it being my intention that upon my death, such to belong to the named beneficiary, at law and in equity, and that such are not to be shared or allocated to other persons.”
Unfortunately, in the course of receiving estate planning advice, Ms. Gully was not advised to inform Steven that she had added him as a joint tenant on title to the Property. In August 2017 Steven and his company, Atimi Software Inc., consented to judgment in favour of Ledcor in the amount of $800,000. At this point Steven was still unaware that he was added as a joint tenant to the Property. Shortly after in October 2017 Ledcor registered a certificate of judgment upon the undivided half interest of Steven in the Property. The following month Ms. Gully executed a new Will which severed the joint tenancy with Steven and disinherited him. Justice Baker found that Ms. Gully’s execution of the 2017 Will was done in direct response to Ledcor’s certificate of judgment registered on the Property.
In her application to the Court Ms. Gully sought, among other things, a declaration that Steven held his half interest in the Property on resulting trust in her favour because the 2015 transfer had been made to facilitate the Property eventually being transferred to her grandchildren on her death. Justice Baker dismissed Ms. Gully’s application and held that Ms. Gully had intended to gift Steven half of the Property, which meant that Ledcor was entitled to register the certificate of judgment against Steven’s interest in the Property.
Importantly, and with respect to Ms. Gully’s resulting trust claim, Justice Baker held that even if she had found that Ms. Gully did not intend to gift the Property to her son, due to certain provisions of the Land Title Act Ms. Gully’s claim would have no bearing on the interests of third parties such as Ledcor.
As noted by Justice Baker, Ms. Gully took a risk in registering her son as a joint tenant on the Property. Luckily, Ledcor advised the Court that it will not dispossess Ms. Gully of her home while she is living in it. Ms. Gully was fortunate in the circumstances, but this case serves as one of many cautionary reminders to seek a qualified lawyer to assist with your estate planning.