A life-interest allows a testator to gift the ultimate benefit of real property, while providing in the interim for a loved one during their lifetime. For example, a woman may want to allow her common law spouse to live in her home for his lifetime but ultimately want her children from a previous relationship to receive it. In order to accomplish this, the woman would give her common law spouse a life-interest in the house; after his death, the house would belong to her children, the ultimate beneficiaries. The person with the life-interest is called the life-tenant; the ultimate beneficiaries are known as the remaindermen.
While this approach allows a testator some control of their property after death, it can raise disputes regarding who is responsible for paying certain expenses associated with the real property during the lifetime of the life-tenant.
The general rule – as noted in Widdifield on Executors and Trustees, 6th ed, and demonstrated in Re Goodfriend Estate,  OJ No 4291, 4 ETR (3d) 10 at
para 22 – is that “ordinary outgoings of a recurring nature” are the responsibility of the life-tenant. But any expenses that are not ordinary outgoings (i.e. capital expenses) are to be borne by the real estate itself and therefore at the expense of the remaindermen. Both rules are subject to contrary intentions expressed in the testator’s will.
Ordinary outgoings include: heat and hydro, taxes and interest on mortgage debt (but not the principal). In the above example, the common law spouse would be responsible for these expenses. Capital expenses, which are to be borne by the remaindermen, include the following: upkeep/repairs (such as the repair of a roof), expenses of legal proceedings (unless legal proceedings are for the life-tenant’s sole benefit), trustee’s costs and expenses, appointment of new trustees and investment advice.
However, as mentioned above, a testator can express a contrary intention. A testator may direct that ordinary outgoings of a recurring nature be paid out of the property or that capital expenses be paid by the life-tenant. A court will generally enforce the intentions of the testator if those intentions are clear or can be inferred from a reading of the will as a whole.
When a testator considers leaving a life-interest in a piece of real property, it is important to address the issue of payment of various expenses associated with the property in order to avoid conflicts between the life-tenant and the remaindermen.
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