Gully v. Gully
Since the increase in Ontario’s probate tax rate, lawyers and their clients have focussed much energy on reducing and avoiding paying this tax. Unfortunately many strategies employed have either not worked or had serious unintended consequences. Perhaps the worst offender for unintentional consequences is the strategy of a parent putting assets into joint ownership with their children.
The purpose of this article is to remind readers of one of the risks related to joint tenancies. Specifically, that putting a client’s property into joint tenancy with someone else, like their child, can expose that property to the financial and creditor risks of the child. This risk became a reality for Chan Kui Tina Gully (Mrs. Gully) in the case Gully v. Gully (2018) BCSC 1590.
In 1999, Mrs. Gully bought a home in Burnaby (the “Property”). In 2015, she added her son Steven Gully (“Steven”) as a joint tenant on title to the Property. She did so based on legal advice that this would save taxes on her death.
Steven had not made any financial contributions to the purchase or upkeep.
Unfortunately, Steven and his company were experiencing financial difficulties. In August 2017, they consented to judgement in favour of their creditor, Ledcor, in the amount of $800,000. As Mrs. Gully had not told Steven of what she’d done, he did not know he was on title to the Property.
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