Life Interest in a Home: Life Tenant vs Remainder Beneficiary in Ontario

Many wills let a surviving spouse stay in the family home for the rest of their life, with the home going to the children afterward. It feels simple at the time. Years later, questions come up: who pays for the new roof, can the spouse downsize, and can the children force a sale?

This article explains the two roles in plain terms, what the will usually has to answer, and the points of Ontario law that can change the picture. It is general information, not advice on your own will or estate.

Two different interests in the same home

A life interest means a person, the life tenant, is allowed to use the property for as long as they live. A remainder interest means another person, the remainder beneficiary, is entitled to the property once the life interest ends. Both interests come from the same will, so both people have rights that the other must respect.

The estate trustee is the person who carries out the will, winds up the deceased's affairs, pays taxes, bills and debts, and then distributes the estate according to the will. The trustee is often the one who has to make sense of a life interest in practice.

Who pays the costs of the home?

There is no single answer that fits every will. The best starting point is what the will says about carrying costs. Some wills clearly assign ordinary running costs to the life tenant and larger capital costs to the estate or the remainder beneficiary. Others say nothing, which is when disagreements tend to start.

• Property taxes and utilities
• Home insurance
• Routine upkeep, such as cleaning and minor repairs
• Major repairs, such as a roof, furnace or foundation work
• Condominium fees or special assessments, if the home is a condo

While the estate is being administered, the trustee pays the estate's taxes, bills and other debts. If probate is applied for, the Estate Administration Tax is paid by the estate, not by the beneficiaries or the estate representative. Who bears the day-to-day costs after that, if the will is silent, depends on the facts and is worth confirming with a lawyer.

Who can sell the home?

Whether the home can be sold, and who must agree, depends on the will. Look for wording that gives the trustee a power to sell or replace the home, or that requires the life tenant's consent. A life tenant who wants to move into a smaller place will want to know whether the will allows proceeds to be used for a new home. If the will does not address this, the answer is not obvious and legal advice is sensible before anyone lists the property.

If the owners of inherited land are co-owners, a joint tenant or tenant in common can be compelled to make partition or sale under section 2 of the Partition Act. The co-owner resisting a sale bears the onus, and a sale is refused only for malicious, vexatious or oppressive conduct. Where the land passed by will or on intestacy, no partition proceeding may be taken until one year after the death. Whether that rule applies to a life interest arrangement depends on how the will sets up ownership.

A surviving spouse may have a choice

When a spouse dies leaving a will, the surviving spouse must elect either to take under the will or to receive the equalization entitlement under section 5 of the Family Law Act. A spouse who has only a life interest in the home may want to compare that with the equalization entitlement before deciding.

• The election must be in the prescribed form and filed with the Estate Registrar for Ontario within six months after the first spouse's death.
• A spouse who does not file in time is deemed to have elected to take under the will or under the Succession Law Reform Act, unless the court orders otherwise on application.
• No distribution may be made from the deceased spouse's estate within six months of death unless the surviving spouse consents in writing or the court authorizes it.

Common-law couples are not covered by the Family Law Act property-division rules, so this election is a question for married spouses. Because the deadline is short, speak to a lawyer early.

What to do next

• Read the exact life interest wording in the will, including any power of sale and any costs clause.
• Note the date of death and calendar the six-month election deadline if the life tenant is a married spouse.
• Keep records of who pays taxes, insurance and repairs, and when.
• Talk to the other side early, in writing, about expected costs and any plan to move.
• Get legal advice before selling, borrowing against the home or starting a court application.

Frequently asked questions