rick gendemann, manning elliot - estate tax planning
DESCRIPTION
Rick Gendemann, Manning Elliot - Estate Tax PlanningTRANSCRIPT
![Page 1: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/1.jpg)
Estate Tax Planning
Presented by:
Rick Gendemann, CA
September 15, 2010
![Page 2: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/2.jpg)
ESTATE TAX PLANNING
• Goals and Objectives to Estate Planning
• Overview of Taxation Issues on Death
• Tax Planning Strategies for:• Tax minimization on death
• Structuring your estate for your beneficiaries
![Page 3: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/3.jpg)
ESTATE TAX PLANNING
• Goals and Objectives to Estate Planning• Peace of Mind
• Organization of Financial Affairs
• Structured Plan for Wealth Preservation
• Effective Transition of Your Estate to Your Beneficiaries
• Tax Minimization
• Probate Fee Minimization
![Page 4: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/4.jpg)
ESTATE TAX PLANNING
• Estate Planning for Your Family
Structuring your financial affairs to:• Minimize taxes on death
• Maximize wealth preservation for your beneficiaries
• Planned asset/wealth transfer to beneficiaries
![Page 5: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/5.jpg)
ESTATE TAX PLANNING
• Review of Tax Issues on Death• Current regime of estate/death taxes
• Deemed disposition of assets at fair market value
• Options to defer effect of deemed dispositions• Transfer of assets to spouse
• Transfer of assets to a spousal trust
• Transfers to family trust or family holding company
![Page 6: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/6.jpg)
ESTATE TAX PLANNING
• Deemed Dispositions of Assets on Death• Generally all assets deemed sold at market value of
assets at that time
• Will trigger capital gains on property which has appreciated in value
• Income taxes payable on net capital gains realized
• Option to defer capital gains where assets are transferred to spouse or trust established for sole benefit of spouse
![Page 7: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/7.jpg)
ESTATE TAX PLANNING
• Planning Strategies for Tax Minimization Consider careful structuring of Will to utilize
spouse and spousal trust tax deferred rollovers to:• Defer capital gains until death of surviving spouse
• Defer deemed collapse of deferred income plans (RRSP’s and RRIF’s)
• Caution, specific rules must be met for spousal trust to qualify for tax deferral
![Page 8: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/8.jpg)
ESTATE TAX PLANNING
• Planning Strategies for Tax Minimization
Planned Giving ( donations in year of death)• May claim donations to reduce 100% of net income in
year of death
• Excess donations not claimed on final tax return may be carried back to prior year to recover taxes
![Page 9: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/9.jpg)
ESTATE TAX PLANNING
• Planning Strategies for Tax Minimization
Donations created through provisions of a Will• Care must be taken to ensure Will is specific to ensure
donation credit is available on final tax return
![Page 10: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/10.jpg)
ESTATE TAX PLANNING
• Planning Strategies for Tax MinimizationEffective tax planning for trusts created by the
deceased’s Will (Testamentary Trust)• Create spousal trust for benefit of spouse
• Provide income for spouse during lifetime
• Preserve capital for children
• Create multiple trusts to split income & save taxes
• Utilization of marginal tax rates to save taxes
![Page 11: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/11.jpg)
ESTATE TAX PLANNING
• Structuring your financial affairs to:• Avoid payment of probate on death (1.4% of
Estate)
• Avoid public disclosure of deceased’s assets
• Planned asset/wealth transfer to beneficiaries without potential for Will’s variation challenges
• Substitute for power of attorney (representation agreement)
![Page 12: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/12.jpg)
ESTATE TAX PLANNING
• Planning to Minimize Probate Fees
• Two available types of Inter Vivos Trusts:
»Alter Ego Trust
» Joint Partner Trust
![Page 13: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/13.jpg)
ESTATE TAX PLANNING
• Alter Ego and Joint Partner Trusts
• Conditions for use:• Taxpayer (settlor of trust) must be 65
• Taxpayer (and/or spouse) entitled to receive trust income during lifetime
• No other person entitled to income or capital until death of taxpayer (and spouse)
![Page 14: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/14.jpg)
ESTATE TAX PLANNING
• Advantages of Structuring and Using Alter Ego and Joint Partner Trusts• Avoid provincial probate fees• Family asset protection
• Assets held in trust offers protection from creditor claims versus assets held personally
• Avoidance of potential Will’s variation action
• Confidentiality • no public disclosure as in the case of probate application
![Page 15: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/15.jpg)
ESTATE TAX PLANNING
• Advantages of Structuring and Using Alter Ego and Joint Partner Trusts• Administrative ease
• Ownership of assets can be centralized
• Transfer of assets less complex
• Trustee can distribute assets with out court approval or probate application
• Management of trust property will continue seamlessly until distributed
![Page 16: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/16.jpg)
ESTATE TAX PLANNING
• Advantages of Structuring and Using Alter Ego and Joint Partner Trusts• Alternative to Power of Attorney
• Allows greater flexibility for incapacity planning
• Terms of the trust can be tailored to meet the specific needs of the client
• Third parties recognize trustee relationship (particularly if there are assets held in multiple jurisdictions)
• Avoids possible multiple Powers of Attorney for assets held in multiple jurisdictions
![Page 17: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/17.jpg)
ESTATE TAX PLANNING
• Disadvantages of Structuring and Using Alter Ego and Joint Partner Trusts
• Cost to implement and administer plus added complexity
• Required to file annual tax returns, etc.
• Loss of access to capital gains exemption claim• Testamentary spouse trust could have provided for this
• Loss of low tax bracket planning otherwise available with testamentary trusts created through a Will
![Page 18: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/18.jpg)
ESTATE TAX PLANNING
• Disadvantages of Structuring and Using Alter Ego and Joint Partner Trusts• Loss of tax deferred intergenerational transfers
• No tax deferred rollover otherwise available for qualified farm property or shares of qualified farm corporation
• Post mortem planning where shares of companies involved may be adversely affected• May create future double tax on appreciated value of assets
in company if assets sold by company
![Page 19: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/19.jpg)
ESTATE TAX PLANNING
• Disadvantages of Structuring and Using Alter Ego and Joint Partner Trusts• Principal residence designation issues
• May cause multiple loss of residence exemption for all beneficiaries
• Charitable donation planning• No ability to carry back excess donation credits
![Page 20: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/20.jpg)
ESTATE TAX PLANNING
• Freezing the Value of Your EstateLocking in today’s value of investments
• Fix the capital gain to be realized on death
• Provide sufficient capital for retirement
• Allow for growth of investments to accrue to beneficiaries of your Estate
![Page 21: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/21.jpg)
ESTATE TAX PLANNING
• Freezing the Value of Your Estate• Transfer your investments to a family holding company
or a family trust
• Allows for continued control over assets during your lifetime
• Ability to draw down capital in a structured manner• Can plan for tax effect each year of draw down
• Provides capital growth for beneficiaries
![Page 22: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/22.jpg)
ESTATE TAX PLANNING
• Freezing the Value of Your EstateSummary of Advantages• Freezes amount of taxes payable on death
• Provides for growth in asset value to accrue for the benefit of beneficiaries ( Wealth Preservation )
• Provides structured retirement income planning
• Maintain control over assets during lifetime
• Potential to defer taxes on asset growth to next generation
![Page 23: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/23.jpg)
ESTATE TAX PLANNING
• Closing Thoughts and Comments
• Estate planning is on ongoing process
• To achieve your family goals and objectives requires you to create a plan of attack
• Planning process needs to be monitored and evaluated to ensure your goals and objectives continue to be met
![Page 24: Rick Gendemann, Manning Elliot - Estate Tax Planning](https://reader035.vdocument.in/reader035/viewer/2022062303/5563c483d8b42abe468b4a03/html5/thumbnails/24.jpg)
ESTATE TAX PLANNING
Open forum for Discussion and Comments