1] have you received my cheque for my 2006 taxes invoice?
2] my mom's husband [my stepfather] passed away earlier this year. He willed his xxxxxxxx townhouse (in which he & my mom lived, and in which she still does) to be split as follows:
40% to son [my stepbrother]
40% to daughter [my stepsister]
20% to my mom.
The three of them are on very good terms.
The thinking has been that sometime over the next few months the townhouse would be sold, the proceeds divided and my mom would move to a smaller place. My mom is now considering (subject to stepfather's kids agreeing):
i) having the townhouse appraised/valued; she figures it's about $300,000
ii) using her RRSP to buy the home, and pay each of them 40% of appraised value (i.e. $120,000 each in this example) and staying there.
Further background:
- she has never been a homeowner in whole or in part
- her RRSP is not worth much more than $250,000
- she's 68, in good health, has a part time job
- she realizes that her post-purchase income (job/pension) will also be a determining factor
So, my/her questions are:
a) is there still a program in which first-time home buyers can use their RRSP to purchase, with minimal or no tax consequence?
b) what is your opinion on what she's considering?
My humble thanks,
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david ingram replies;
I received and deposited the cheque. thank you.
I am surprized at the will. It is unusual for your stepfather to break it up that way unless it was a very very short marriage. If it was a long marriage, she can challenge the will and get the whole house or 80% herself or at the very least, the use of the house as a life estate. A life estate leaves the house to his children but she gets the use of the house until her death. in the case of a life estate, ther is no onus on her to pay anything to them in the meantime. If they wanted money, they could mortgage their respective shares but would have to make payments themselves.
Usually, he would at least leave her with a life estate for the use of the house until her death. I think she should challenge the will and the house should be hers to live in until her death or inability to look after herself in the house.
On the other hand, if they were only married for three years and that was what she understood would happen, she should just proceed.
There is a first time homeowner's RRSP loan for $20,000 but it does not apply in her case becasue to use it, neither she nor her husband could have owned a home in the last five years.
She can arrange to use her RRSP to put a first mortgage on the house to buy it from the kids if that is what she decides to do.
She needs to see a good family lawyer. AND, it does not matter what the relationship with the step kids is. It is to their advantage to leave the will as it is. If they have not themselves recognized the inequity, the relationship will not remain 'good'. I am putting this on the list to see if any of the others want to comment with suggestions.
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People do funny things with their wills. In one I have dealt with lately, Dad disowned his son (who admittedly he had little contaxct with for 10 years) and left all his estate to an old girl friend from when he was 16 or 17. He had two wives in between then and his death at 64. The old ex-girl friend did not even go to the funeral.
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