Bought a Home in BC? Why Your Will Needs a Second Look

Completion day is a milestone, and the paperwork usually stops there. But a home is often the largest asset you will ever own, and your will may not deal with it the way you expect.

This guide explains how joint tenancy and tenancy in common affect your estate, why the mortgage usually follows the home under BC law, and the situations where buyers most often need a new or updated will.

Start with how you hold title

Your will can only deal with property that forms part of your estate, so the first question after a purchase is how your name went on title.

• Joint tenants. When one joint tenant dies, their interest generally passes to the surviving joint owner rather than under the will. If you bought with a spouse as joint tenants, your will may have little to say about the home while the other owner is alive. Our article on transferring title after a joint tenant dies explains that process.
• Tenants in common. Each owner holds a separate share that passes under their own will, or under the intestacy rules if there is no will. Under BC's Property Law Act, when land is transferred to two or more people they are tenants in common unless the transfer shows a contrary intention, and their shares are presumed equal if the transfer does not state them.

If you are not sure which applies, a title search or the transfer from your purchase will show it. It is easy to forget what was decided in the rush before completion, so it is worth checking now.

Your mortgage travels with the home

People often assume their estate will pay off the mortgage before the home passes to a beneficiary. BC's Wills, Estates and Succession Act (WESA) takes the opposite starting point. For a purchase money mortgage registered against the property, the gift of that property is primarily liable to pay the debt, to the extent the debt relates to buying, improving or preserving it.

So if your will leaves the home to one child and the rest of your estate to another, the first child may receive the home subject to the mortgage. A general direction to "pay my debts" is not enough to change this. The will must show the contrary intention with words that expressly or by necessary implication refer to that debt. If you want the mortgage paid from other assets, or covered by insurance, the will needs to say so clearly.

Old wills and new property

WESA says that, unless the will shows otherwise, a reference to property in a will is read as if the will had been made immediately before death. That helps when a will refers to "my home" in general terms. It does not help when a will describes a specific condo or address you have since sold. A gift that cannot take effect is redirected, generally to an alternate beneficiary named in the will or to the residue, which may not be where you wanted the value of your home to go.

A new purchase is also a good time to check that your executor, alternate executor and guardian choices still make sense, and that the will was signed and witnessed correctly in the first place.

If you die without a will

Without a will, WESA's intestacy rules decide who receives your share of the home.

• If you leave a spouse and no descendants, the estate goes to the spouse.
• If you leave a spouse and descendants, the spouse receives the household furnishings and a preferential share, and the rest is split between the spouse and the descendants. The preferential share is larger when all the descendants are children of both spouses.
• The surviving spouse also has a right, in some circumstances, to acquire the spousal home from the estate toward their share.
• If you have no spouse, the estate passes to your descendants, and if none, to more distant relatives in a set order.

These rules can produce results families do not expect, such as a young child inheriting part of the family home, which then has to be managed for them until adulthood. Our guide to dying without a will in BC covers the full order.

Unmarried partners and co-buyers need extra care

Under WESA, people who are not married are spouses only if they lived together in a marriage-like relationship for at least two years. Couples who buy together early in a relationship may not yet meet that test, which matters if one of them dies without a will. And the relationship of unmarried spouses ends for WESA purposes when one or both of them end it.

If you bought with a sibling, parent or friend, the questions are different. If you hold as tenants in common, your share goes to your own beneficiaries, who will then co-own with the other buyer. A co-ownership agreement and wills that work together can set out buy-out rights and who pays the mortgage and expenses in the meantime.

Plan for incapacity as well as death

A will only speaks on death. If an illness or injury left you unable to manage your affairs, someone would need legal authority to deal with your mortgage lender, insurer and property taxes, or to sell or refinance the home. An enduring power of attorney gives a person you choose that authority. Our overview of estate planning documents in BC explains how it fits with a will and a representation agreement.

Just completed a purchase? Bring your estate plan up to date

Our wills and estate planning lawyers can review how you hold title alongside your current will, prepare a new will that deals clearly with the home and the mortgage, and put an enduring power of attorney and representation agreement in place.

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