Meeting with a lawyer to properly plan for the administration of your estate is critical in efforts to minimize estate litigation. Of course, it’s impossible to plan for every possible situation that may arise, but having a lawyer by your side can help in ensuring some of the common details people overlook are avoided. In a recent decision from the Ontario Superior Court of Justice, the courts were tasked with addressing what to do with land that a deceased person’s son lived on and contributed to after the deceased passed away without a will.
A family business that wasn’t
The issue can be traced back to a plan the deceased father had to build a subdivision. The son joined his father in his framing business in the late 1980s. During this time the son became aware of some vacant land that could be used to build houses on, something the father had expressed an interest in doing. The father purchased the land in 1988 for $160,000 and took title in his name along.
The father had hoped to be able to sever the land into lots, build houses on them, and sell the homes for a profit. Before any of this began, the father told the son to take a section of the property for himself and build a home for his family. Construction began on the home in March 1989 and was initially funded by the son and his wife.
Unfortunately, around that same time, the father learned that his request to sever the lot had been denied. Additionally, the son ran out of money to build his home, and had to borrow some from the father, who took out a mortgage to assist. The son and his wife eventually discharged this debt. The son and his wife performed a large number of improvements on the house after they moved into it, including replacing the roof twice.
The father and son were understandably upset that their plans fell through, but the father was quoted as telling the son not to worry because it would all belong to him one day.
Father dies without a will
The father died in 2004 and did so without a will. Upon his death, the son and his wife claimed they had a beneficial interest in the property and that lumping it into the rest of the estate would result in unjust enrichment. But the estate disagreed, stating that an agreement for the son to keep that land did not exist.
The court considered the son’s claims about unjust enrichment. The court recognized the contributions the son and his wife made to the home, finding it reasonable for them to receive some benefit for their ongoing improvement and upkeep of the property. The court also acknowledged that the son and his wife benefited from having received the property at a cost lower than the market rate. However, there was no proof of an agreement by the father to give the land and home to the son. As a result, the court determined that the land and house should be sold, with 75% of the proceeds to go to the son and his (now ex) wife and the rest to go to the estate.
At Derfel Estate Law our Toronto estates lawyers work tirelessly to achieve the best possible resolution to your will, estate, or trust matter. Call us at 1-844-2-DERFEL or contact us online to schedule a consultation.