A decision of the Ontario Superior Court last month suggests a novel way of avoiding the need to pay province’s 1.5 per cent estate administration tax on real estate when the property owner dies.
Before her death in January 2011, Ann Sproul was the registered owner of a 54 per cent interest in a property on Hillsdale Ave. E., in Toronto. Her son, James, owned the other 46 per cent share of the house.
In November 2002, Ann signed a deed transferring her interest in the house to James. She gave it to her lawyer, but when he tried to register it, there was a minor title problem. Her lawyer called James and asked him to look into it but James did nothing and the deed was not registered during Ann’s lifetime.
In her will, Ann left her entire estate to her children Marilyn and James equally. It was only after her mother died that Marilyn discovered that her mother had signed over her share of the house to James.
Eventually, the brother and sister wound up in court. Marilyn’s position was that the deed was invalid and the estate owned her mother’s 54 per cent share of the house. If the court ruled in her favour, she would end up with half of her mother’s interest in the property.
Marilyn argued that the deed was invalid because it was never registered. James took the position that the property belonged to him outright.