{"id":597595,"date":"2026-04-21T13:10:10","date_gmt":"2026-04-21T13:10:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/597595\/"},"modified":"2026-04-21T13:10:10","modified_gmt":"2026-04-21T13:10:10","slug":"what-you-need-to-know-before-passing-property-to-adult-children","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/597595\/","title":{"rendered":"What you need to know before passing property to adult children"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

According to a 2025 BMO survey, 65 per cent of Canadians plan to transfer real estate or property to the next generation.Getty Images<\/p>\n

The emotional weight of passing a family cottage or a childhood home to the next generation can obscure a costly financial reality: What seems like a simple line in a will or a name on a title can trigger tax consequences, legal complications and family tensions. <\/p>\n

There can be a lot of confusion and misinformation, particularly around probate, which are the provincial levies applied to a deceased person\u2019s estate, says Michael Isbister, senior investment advisor with Harbourfront Wealth Management.<\/p>\n

\u201cThe biggest mistake families make is focusing on saving a few thousand dollars in probate fees while accidentally creating tens of thousands in tax and legal problems and potential family issues.\u201d<\/p>\n

According to a 2025 BMO survey<\/a>, 65 per cent of Canadians plan to transfer real estate or property to the next generation. But a 2025 report<\/a> by Willful found that only half of Canadians have a will, and two in five have not had a detailed discussion about their estates \u2013 a gap that planning professionals say leaves families exposed.<\/p>\n

Krista Evanisky, a trust and estate practitioner with Clarity Law, says the confusion often starts with a basic question: What does leaving property to a child actually cost and who pays?<\/p>\n

When a parent dies and leaves property to a child, the tax bill doesn\u2019t land on the child, it\u2019s settled by the estate itself using available cash or proceeds from other liquidated assets. <\/p>\n

\u201cRegardless of whether the property is specifically gifted to a child or just left as part of the general residue, any taxes associated with that property are going to be taxed in the parent\u2019s estate,\u201d Ms. Evanisky says. <\/p>\n

If a child already owns a principal residence and later inherits a cottage, they will face capital gains when they eventually sell it. The type of property matters too, Ms. Evanisky says. <\/p>\n

While a principal residence typically passes tax-free at death under the principal residence exemption, a recreational property such as a cottage is generally subject to capital gains \u2013 though the exemption can be applied strategically to either property, whichever carries the higher gain.<\/p>\n

Probate fees vary dramatically by province \u2013 a consideration that can shape the entire conversation. In Ontario, probate fees, officially known as Estate Administration Tax, are $0 on the first $50,000 of an estate and 1.5 per cent of the estate\u2019s value over $50,000. <\/p>\n

\u201cIt can be a significant percentage of the estate,\u201d Mr. Isbister points out.<\/p>\n

He says a common question that comes up when considering the cost and lengthy process of probate is whether it makes sense to add an adult child to the property title while the parent is still alive. Joint ownership can help avoid probate delays, reduce legal fees and keep assets off the public registry. <\/p>\n

\u201cBut there\u2019s way more red flags and issues with this,\u201d Mr. Isbister says. For starters, adding a child to the property title could mean relinquishing control \u2013 any decision to sell or mortgage the property requires their consent. The transfer can also constitute a deemed disposition, a tax rule where the Canada Revenue Agency (CRA) assumes the property was sold at fair market value, even if no money changed hands. If the property has appreciated, Mr. Isbister says the parent may owe capital gains tax on the increase in value, with 50 per cent of the gain included as taxable income.<\/p>\n

Another red flag comes from a shift in family dynamics. Ms. Evanisky points to an adult child who goes through a marital breakdown. \u201cThere\u2019s a potential for that property to be subject to a family property claim from their spouses,\u201d she says. \u201cSame if that child has other creditors, their interest in that property 1776777010 may be available for creditors.\u201d<\/p>\n

Hannah McVean, a financial planner with Objective Financial Partners, says one option for families looking to pass ownership during life is a bare trust \u2013 where legal title belongs to the child, but beneficial ownership remains with the parent. Ms. McVean adds that bare trust arrangements are set to carry annual CRA filing requirements as early as 2026, adding an administrative burden most families wouldn\u2019t anticipate. <\/p>\n

\u201cIn Ontario, for example, it might be tough to argue that the property shouldn\u2019t be formed part of the estate [and] be probated,\u201d she says. \u201cIs that even worth doing? Maybe purely for the sake of administration, if your parent is quite old or is struggling with capacity, but it might not be accomplishing the goal you want of avoiding probate.\u201d<\/p>\n

For those over 65, there is one structural alternative worth exploring: an alter-ego trust \u2013 or a joint partner trust for couples \u2013 which allows a property to pass outside the will and avoid probate while preserving the principal residence exemption. <\/p>\n

It comes with setup costs and annual filing requirements, Ms. McVean says. <\/p>\n

\u201cIt would have to be a pretty significant amount of property to make those filing fees and set-up costs worthwhile,\u201d she says, adding some Canadians are rightfully worried about the tax. <\/p>\n

\u201cI understand why, because it\u2019s a big bill and it\u2019s scary,\u201d she says. \u201cBut the compounding growth on that property is totally tax deferred; in the case of a principal residence it\u2019s tax free, and in the case of a cottage it\u2019s tax deferred.\u201d <\/p>\n

There are still plenty of tax benefits to owning property, she adds. <\/p>\n

Whatever the strategy, Mr. Isbister says it\u2019s important to remember that passing the family property on, and estate planning in general, isn\u2019t always about the financial benefits. <\/p>\n

\u201cWhen you make a will, it\u2019s not really for you. It\u2019s for your beneficiaries. It\u2019s for a smooth transition of assets. It\u2019s for making sure that your legacy is what you want.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: According to a 2025 BMO survey, 65 per cent of Canadians plan to…\n","protected":false},"author":2,"featured_media":597596,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[45169,28,24296,235074,147,530],"class_list":{"0":"post-597595","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-adveditorial","9":"tag-business","10":"tag-noastack","11":"tag-ordid3929245387te","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/597595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=597595"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/597595\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/597596"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=597595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=597595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=597595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}