Brothers Charles and Henry embark on a business plan of buying and renting residential properties. The first is a family residence, with 2 tenants in the basement, but all of Charles’ and Henry’s families also occupy the property as a principal residence. Their Dad and Mom, their wives and their collective 4 children, a total of 12 people including the tenants in 1 house. They take title as joint tenants (which means, if Charles dies, Henry owns the whole house with no credit to Charles, his wife or kids). Clearly fraught with risk to say nothing of the possibility of brotherly discord or Canada Revenue Agency’s interpretation of “principal residence”. Then Charles and Henry go on to buy 6 other houses, each in a machination of joint tenancy ownership and tenancy in common (which means, contrary to joint tenancy, each of Charles and Henry has specific direct percentage ownership in each house and death of either of them doesn’t matter – his respective interest passes to his next of kin). What were they thinking? Well, first, do it on the cheap, presumably. Then, “nothing will go wrong”; it’s family after all. Well, that’s 3 recipes for disaster. What should have occurred? Get it all in writing right from the beginning. Should have had accounting and legal advice. When the inevitable occurs, the unwind costs and the process will definitely be both a multiple (possibly 10 x’s) of the costs of proper setup, but also total family discord. Call us before you embark.
Often the use of a Corporate Lawyer comes about as a result of challenges in business situations. Peter’s blog has been created to demonstrate the range of business situations that require the introduction of a corporate lawyer early in the process to prevent the often complex problems businesses find themselves in. Short succinct examples on asset protection, estate planning, succession planning and a variety of other matters will be addressed interspersed with some fun tongue and cheek responses to the media on issues of corporate law. Enjoy!