planning ahead- estate planning basics
DESCRIPTION
Get organized before you're not around to do it!TRANSCRIPT
* Everyone gets organized at some point, they just might not be around for it.
PLANNING AHEAD*
ESTATE PLANNING BASICS
E. Susan Elliott, LSM, LL.D., B. Comm. (Hons.)
If you have no Will or Power of Attorney then:
Your assets go to your “nearest relatives”
The Province of Ontario may take over your affairs
It increases the likelihood of family fighting and paying lawyers to resolve issues
1. YOU LIKE TO PAY TAXES AND FEES
2. YOU TRUST THE GOVERNMENT TO LOOK AFTER IT FOR YOU
3. YOUR FAMILY ALWAYS GETS ALONG
4. YOU’LL GET TO IT WHEN YOU’RE OLD ENOUGH
5. YOU WILL LIVE FOREVER
THOUGHTFUL, UP TO DATE SET OF DOCUMENTS
CAN INCLUDE ANY OR ALL OF:◦ A WILL OR, MULTIPLE WILLS◦ A POWER OF ATTORNEY FOR PERSONAL CARE◦ A CONTINUING POWER OF ATTORNEY FOR PROPERTY◦ A “LIVING WILL” or ADVANCED HEALTH CARE DIRECTIVE◦ AN INTER VIVOS TRUST◦ A TESTAMENTARY TRUST◦ AN ALTER EGO TRUST◦ DESIGNATED BENEFICIARIES◦ JOINT OWNERSHIP◦ LIFE INSURANCE
FINAL INSTRUCTIONS TO FAMILY & FRIENDS
APPOINTS SOMEONE TO ADMINISTER YOUR ESTATE:
pay bills, including taxes, funeral etc. distribute assets as specified
ONLY COUNTS WHEN YOU ARE DEAD is a “living document”
SHOULD BE CLEAR it’s too late to spell it out after you die
APPOINTS A “SUBSTITUTE DECISION-MAKER”◦ FOR “PROPERTY” – ALL YOUR ASSETS or◦ FOR PERSONAL CARE – MEDICAL & END OF LIFE
MUST BE SOMEONE YOU TRUST WITH:◦ YOUR LIFE◦ ALL YOUR WORDLY GOODS
OFTEN WISE TO APPOINT JOINT ATTORNEYS and, ALWAYS HAVE BACKUP ATTORNEYS
CAN BE AMENDED OR REVOKED AT ANY TIME
A PERSON TRANSFERS PROPERTY TO ANOTHER TO HOLD FOR THE USE & BENEFIT OF OTHERS
CAN BE DONE WHILE ALIVE OR IN A WILL
CAN HAVE CERTAIN TAX ADVANTAGES BUT ALSO COULD HAVE DISADVANTAGES
PROVIDES PRIVACY AND FLEXIBILITY
CAN REPLACE MOST OTHER ESTATE PLANNING DOCUMENTS
SPOUSE OR DEPENDANTS HAVE RIGHTS
◦ CAN INCLUDE CURRENT and FORMER SPOUSE
◦ CAN INCLUDE BUSINESS PARTNERS
◦ CAN INCLUDE ADULT CHILDREN
THE CLAIMS CAN COMPETE WITH EACH OTHER
IF YOU HAVE NO WILL THE CLAIMS COULD BE HIGHER THAN IF YOU HAVE A WILL
DISABLED ADULT CHILDREN◦ REQUIRE A “HENSON TRUST” IF ON ODSP
“SPENDTHRIFT” BENEFICIARIES◦ USUALLY HAVE A SPECIAL TRUST IN THE WILL
MINORS◦ WILL INHERIT AT AGE 18 UNLESS DEFERRED◦ NEED TO HAVE A CONTIGENCY PLAN
2ND (or 3RD or 4TH) MARRIAGES ◦ BLENDED FAMILIES MAY NEED SPECIAL PROVISIONS
COTTAGES ◦ VERY DIFFICULT – SENTIMENTAL vs. PRACTICAL
ASSETS IN OTHER COUNTRIES◦ TIME SHARES◦ BANK ACCOUNTS◦ REAL ESTATE
PRIVATE CORPORATIONS◦ CAN HAVE A SEPARATE WILL
PERSONAL POSSESSIONS ◦ SHOULD BE REVIEWED AND “LISTED” IF
IMPORTANT
CAPITAL GAINS TAX◦ DEEMED DISPOSITION AT DEATH TRIGGERS TAX◦ HARD TO AVOID OTHER THAN SPOUSAL ROLL-OVER◦ APPLIES TO COTTAGES and INVESTMENTS
RRIFs/RRSPs◦ BALANCE IS INCLUDED IN INCOME AT DEATH◦ TAX-FREE SPOUSAL ROLL-OVER
CHARITABLE BEQUESTS◦ CAN BE A WIN-WIN AND REDUCE TAXES
LIFE INSURANCE◦ CAN PAY TAXES AND AVOID A SALE OF THE ASSET
About 1.5% of your estate
Are payable if your Will goes to probate or,
If you have NO WILL and die intestate
Paid on all assets passing through your Will or estate
Can be minimized by: Joint assets Designated beneficiaries Trusts (inter vivos, alter ego)
DECIDE WHO WILL BE IN CHARGE OF WHAT
THINK ABOUT ALTERNATIVES OR BACKUPS
BRING A LIST OF ALL MAJOR ASSETS:◦ INCLUDE OWNERSHIP OR REGISTRATION DETAILS◦ IF CAPITAL GAIN OR LOSS KNOW THE VALUES
INVOLVE FAMILY MEMBERS IN THE PLANNING
CONSULT YOUR FINANCIAL ADVISOR and ACCOUNTANT AS WELL AS YOUR LAWYER
DON’T PROCRASTINATE, START SOMEWHERE!
Tel. 613-544-1330Fax 613-547-4538Email: [email protected]