Estate and Financial Planning Issues

As your business and personal circumstances change, your financial plans, both current and future, should be reviewed and updated. Estate planning is an integral part of overall tax minimization. We work with you to deal with the effect of wealth on relationships and develop succession strategies all the while preserving control and flexibility.

We would be happy to meet with you to discuss any of the important matters below:

·        Decide how you wish your assets to be managed and distributed in retirement

·        Review and update for Wills, Power of Attorneys, and Health Care Matters,

·        Determine which assets might flow to beneficiaries within the will vs outside of the will

·        Should multiple wills be considered?

·        What happens with RRSPs?

·        Probate Fee issues

·        Possible use of spousal trusts, testamentary trusts, and life insurance trusts

·        Possible use of Alter Ego Trusts

·        Spousal Rollovers for income taxes

·        Benefits and pitfalls of having your assets registered jointly with your spouse or children

·        Documentation considerations for your estate

·        Consideration of specialized Insurance products to achieve

·        $750,00 Capital Gains Deductions relating to small business shares

·        Tax issues related to principal residences and cottages

·        Tax consequences of gifts and income attribution back to donor

·        How is estate planning impacted by creditor proofing?

Frequently Asked Questions: Wills and Power of Attorney

1. Q: What is the difference between a Will and a Financial Power of Attorney?

A: A Will is effective when you pass away, but not before. A Financial Power of Attorney is only effective while you are alive but not after. For this reason, the executors you appoint in your Will cannot help you if you lose your mental capacity. Only an attorney named in a proper Financial Power of Attorney can step in and manage your financial affairs in such circumstances.

 2. Q: What is an Executor?

A: An Executor is a person or institution whom you name as your trusted representative and looks after your estate after you pass away.

 3. Q: Can I write my own Will?

A: Many jurisdictions will allow you to write your own Will. Such a Will is known as a holograph Will and must be in your own handwriting, signed by you and dated. There are no witnesses to such a Will. Be careful. This is a minefield.

 4. Q: Can a beneficiary be an Executor?

A: There is no restriction on a beneficiary being an Executor and in fact it is quite common, for example, for a spouse or mature child to be a beneficiary under the Will and to be an Executor as well. However a beneficiary should never be a witness to your Will.

 5. Q: Can an Executor be a Guardian of my young children?

A: An Executor is allowed to be a guardian, but you should be careful because there is a potential conflict of interest. If a cousin or a good friend becomes guardian of your young children, it may be that the guardian has to increase the size of his or her house in order to accommodate your children. Whose money will the guardian use? If the guardian has custody of your money, it may be that your children's money is used to expand or enhance the guardian's house. That money might otherwise be ear marked for earning interest for the children. Separate appointments for executor and guardian are preferable.

 6. Q: What does it mean to own my home in joint tenancy with my spouse?

A: In most jurisdictions, joint ownership is expressed by the term "Joint Tenancy". This does not describe a landlord and tenant situation. Joint Tenancy is an old English expression describing a form of ownership. If one of the joint owners dies, the interest of the deceased automatically becomes owned by the survivor. Typically, the family home is held by the husband and wife as Joint Tenants. In some jurisdictions the expression joint ownership is used. If one spouse dies, the other spouse owns the entire home because the property interest of the spouse who died passes by operation of law to the spouse who survives. You have to remember that ownership will pass independently of your Will. A good consequence of this arrangement is that the probate fees will not have to be paid on the home. A bad consequence of this arrangement will be that you cannot leave this property to anyone under your will. In law you can only leave in a Will what you own. You cannot leave what you do not own. By the operation of law referred to above, you do not own your interest in the home, and therefore cannot leave it in your Will to anyone.

 7. Q: What is a Living Will?

A: A Living Will is a document where you instruct someone to carry out your wishes as they relate to your medical treatment. Sometimes it is called an advance directive. Typically, a Living Will may express your wishes that you receive merciful treatment, that you be spared all pain possible, but that no heroic measures be taken to prolong your life.

 8.Q: Am I allowed to appoint more than one Executor in my Will?

A: There are no restrictions on appointing multiple executors. You may wish to consider providing for only one executor, and if that executor is not able to act, one or more other executors can be appointed as back-ups to the primary executor. In other situations, multiple appointments provide for two, three, four or even more executors.

 9. Q: If I do appoint multiple executors how can I minimize executor deadlock?

A: The law in many jurisdictions requires your executors to act unanimously. If you wish to override this requirement, you have the right in your Will to provide that a decision can be made based upon a majority of your executors.

 10. Q: What if I die without a Will?

A: In most jurisdictions, this is referred to as dying intestate. Unfortunately, there is no named executor and someone has to be appointed in accordance with the law of your jurisdiction. This means applying to Court, and this process can be time consuming and expensive and will likely result in the estate being frozen until someone is appointed by the Court and has court approval to carry out his or her functions. Furthermore, your estate will follow legislated guidelines. For example, in the jurisdiction of Ontario, Canada as at 1999, the first $200,000.00 of your estate is paid to your spouse. After that, your spouse splits your estate with your children. If there is only one child, the spouse takes half of the remaining money and the child takes half. If there is more than one child the spouse takes 1/3 and the other children share 2/3. The money is held in trust for the children until they reach the age of 18 and then it is all paid out to them immediately. Usually, the person appointed by the Court will have to pay premiums to a bonding company every year until the youngest child achieves the age of 18, in order to provide for a court bond to secure the estate administration.

 11. Q: What if there is no executor named in my Will?

A: If there is no executor named, your beneficiaries must appoint an executor by way of court application and the estate will be frozen until the executor is appointed.

 12. Q: What happens if I appoint an executor, but that executor dies or refuses to act or becomes incapable of acting?

A: Usually, this problem is circumvented when you appoint an alternate executor to act on your behalf in your Will. However, if there is no alternate executor, it is likely that a Court Application will have to be made in order to solve this problem.

 13. Q: What if I will someone a gift but the gift no longer exists when I die?

A: In law this is referred to as "Ademption". In this case, there is nothing for your beneficiary to take and the gift is not applicable. Careful wording is required with respect to this matter. For example, you may wish to provide a substituted gift to replace such primary gift if such primary gift is not there when you die.

 14. Q: How will my executor know what I own when I die?

A: There is no public record and it can be very expensive to correspond with banks to ask them to search. Accordingly, it is important to set out what you own in a logical and organized manner so that your executor can receive the proper information. You may keep the document in a sealed envelope to be opened when you die, provided that you regularly update your information.

 15. Q: How many witnesses are required for my Will?

A: In most jurisdictions, the law requires two witnesses, each of whom must see the Will being signed in your presence and in the presence of each other. There are some jurisdictions [eg United States] where three witnesses are required. A holograph Will (if it is permitted in your jurisdiction) which is written in your handwriting does not require any witnesses.

 16. Q: If I am going to remarry, does the new marriage nullify my Will?

A: Marriage will nullify your old Will in most jurisdictions, unless that Will is made in contemplation of the new marriage.

 17. Q: What will/should trigger a change in my Will?

• A change in the law
• A death of a beneficiary
• Disappearance of assets named in the Will
• Remarriage
• Separation
• Divorce
• Having children
• Having grandchildren
• When your executor has become older, more distant, or has passed away, you will require new executors

This list is not exhaustive.

18. Q: I am a witness to my friend's Will. In the Will, he left me his car. Can I be a witness and a beneficiary?

A: No. The result of your being witness will be that the gift of the car will be void. In some jurisdictions, there may be more severe consequences. A beneficiary must never be a witness to a Will.

19. Q: I have property in various jurisdictions. Do I need separate Wills and Powers of Attorney for each jurisdiction?

A: It is advisable to have separate Wills and Powers of Attorney in jurisdictions where your assets are located, particularly if those assets include real estate. One example would be a condominium in Florida owned by a resident of Canada or a resident of another state. It would be advisable to have a Durable Power of Attorney for Florida and a Will covering your Florida assets.