Food for Thought: Estate Planning for Young Home Owners

May 25, 2017 Doreen So Estate & Trust, Estate Planning, General Interest, In the News, News & Events, Wills Tags: , , , , , , , , , , 2 Comments

The topic of home ownership, and, particularly, the ability of young adults to buy their first home is a trending topic lately.  According to a Globe and Mail article on whether millennials are being pushed “into a financial abyss of home ownership”, Manulife Bank has conducted a survey which revealed that 45% of millennial home buyers received a gift of money or loan from family, and that one-third of these lucky youngsters received more than $25,000.00.

Regardless of whether prospective first time home buyers are wasting money on delicious, but expensive, avocado toast as Tim Gurner may have controversially implied, home buyers with mortgages should give consideration to how they would want the mortgages on their properties to be satisfied upon their death.

Pursuant to section 32 of the Succession Law Reform Act, a mortgage on an estate property shall be proportionately satisfied through the interest of the beneficiaries of that property, if the deceased has not, by will, deed, or other document, signified a contrary or other intention.  For each beneficiary of a property, “every part of the interest, according to its value, bears a proportionate part of the mortgage debt on the whole interest”.  The Act is also clear that a general direction for the payment of all debts from the residue of the Estate does not suffice to rebut the application of section 32 unless “he or she further signifies that intention by words expressly or by necessary implication referring to all or some part of the mortgage debt”.

Regardless of the foregoing, nothing in section 32 of the Act shall affect the mortgagee’s right “to obtain payment or satisfaction either out of the other assets of the deceased or otherwise”.

Just for fun, here is a link to a CNBC article on some statistics related to millennials, their spending habits, and the average price of a single avocado.

Thanks for reading!

Doreen So

2 Comments

  1. Paul 2 years Reply

    Excellent observations Doreen. We need more discussion of these issues, especially in view of our obligations to best advise with a view to security and risk. An important excerpt from the (CNBC – NYT) article you referred us to “Homeownership is historically lower among young adults and has declined across most age groups since the 2008 financial crisis as the ratio of home prices to median household income has climbed. “

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