Adding an Adult Child to Your Home's Title in BC: The Risks

Many parents consider adding an adult son or daughter to the title of the family home as joint tenants. The idea is that when the parent dies, the home passes to the child by survivorship, outside the will and without probate fees.

Sometimes that works as intended. In other cases it creates problems that cost more than the probate fee it was meant to save. This article sets out the main risks so you can ask the right questions before you sign a transfer.

What adding a child to title actually does

When you transfer your home into joint tenancy with a child, the child becomes a registered owner with you. When one joint tenant dies, the survivor generally takes the whole property. Because the home does not pass to your executor, it is not counted in the value of the estate for probate fees.

But registration is only part of the picture. The law also asks who owns the home beneficially, meaning who is really entitled to its value, and that is where many of the problems start.

Risk 1: the child may hold the home in trust for your estate

In Pecore v. Pecore, the Supreme Court of Canada confirmed that when a parent transfers property for no payment to an adult child, the law generally presumes the child holds it in trust for the parent, and after the parent's death for the parent's estate. The child can rebut that presumption only with evidence that the parent intended a gift, including a gift of the right of survivorship.

If your intentions are not clearly documented, your other children may argue after your death that the home belongs to the estate and should be shared under your will. That is a common source of estate litigation, and it can cost far more than the probate fee you hoped to avoid.

Risk 2: income tax on your child's share

A home can be sheltered from capital gains tax under the principal residence exemption only for years in which it is ordinarily inhabited by the owner, the owner's spouse or common-law partner, a former spouse or partner, or the owner's child, according to the CRA's folio on principal residences. If your adult child owns a real share of your home but lives elsewhere, the child may not be able to shelter that share, and a gain may be taxable when the home is later sold.

Depending on how the transfer is structured and what interest your child really receives, the transfer itself may also have tax consequences for you. This is an area where you should get tax advice before acting, not after.

Risk 3: your child's creditors, separation or bankruptcy

Once your child is on title, their registered interest can be exposed to their own legal problems. A judgment creditor may try to register against it, a trustee in bankruptcy may claim it, and if your child separates, their spouse may raise it in the property division. How a share received from a parent is treated on separation depends on the Family Law Act and the facts; see gifts and inheritances on separation.

Risk 4: you lose sole control

With a co-owner on title, you generally need their signature to sell, refinance or mortgage the property. If your relationship with your child changes, or if your child becomes ill or dies first, you may not be able to deal with your own home without their cooperation, or without dealing with their estate.

Risk 5: property transfer tax and new trust reporting

Adding a name to title is a transfer of land, and property transfer tax may apply unless an exemption fits. Section 14(3)(b) of the Property Transfer Tax Act exempts a transfer to a related individual if the land has been the principal residence of the transferor, or of the transferee, for a continuous period of at least 6 months immediately before the transfer, subject to other conditions in the Act. Our article on PTT exemptions for family transfers explains how these work.

There is also a federal reporting question. If your child is on title only to hold the home for you, the arrangement may be a bare trust. The CRA states that reportable bare trusts are required to file for taxation years ending on or after December 31, 2026. Its guidance includes an exception where the legal owners are related individuals and the property would be the principal residence of one or more of the legal owners for the year, which may cover a parent who lives in the home and is still on title. Arrangements outside that exception may have to file. Because the guidance is new and still being updated, check the current CRA page or ask your accountant before the year ends.

Alternatives worth discussing

Probate fees in BC are a fixed formula, roughly 1.4% of the value above $50,000, and they are often smaller than people assume compared with the risks above. Depending on your goals, alternatives may include a carefully drafted will, a written declaration of your intentions if you do proceed with joint title, or other planning tools. Our article on reducing probate fees in BC: what works and what backfires compares the options.

If you do decide to add a child to title, the documents should state clearly whether you intend a gift of the survivorship right, and your will should be consistent with that choice.

Considering a title change? Check the risks before you transfer

Our wills and estate planning lawyers can review your goals, explain how a transfer would interact with your will and your other children's interests, and prepare the documents to record your intentions.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.