Estate Legacy Planning 2009

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An overview of the issues affecting estate planning

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  • Estate Legacy Planning 2009

    1. 1. Welcome
    2. 2. Estate & Legacy Planning
    3. 3. <ul><li>Family Issues </li></ul><ul><li>Protecting your Lifestyle </li></ul><ul><li>Investing for the Future </li></ul><ul><li>Retirement Planning </li></ul><ul><li>Your Legacy </li></ul><ul><li>Philanthropy </li></ul>Geoffrey Parker, CFA, CFP
    4. 4. Estate Planning Geoffrey Parker, CFA, CFP
    5. 5. Estate Planning Your Beneficiaries Charity Family CRA
    6. 6. Estate Planning Your Beneficiaries Charity Family CRA
    7. 7. <ul><ul><li>Determine what you want to do </li></ul></ul>Estate Planning <ul><ul><li>Review assets and record location </li></ul></ul><ul><ul><li>Review beneficiary designations </li></ul></ul><ul><ul><li>Consider use of Trusts </li></ul></ul><ul><ul><li>Consider benefits of jointly owned property with spouse </li></ul></ul><ul><ul><li>Review life insurance needs </li></ul></ul>
    8. 8. <ul><ul><li>Avoid intestacy – prepare a will </li></ul></ul>Estate Planning <ul><ul><li>Prepare POA’s for property and personal care </li></ul></ul><ul><ul><li>Preplan funeral arrangements </li></ul></ul><ul><ul><li>Talk with family members and executors </li></ul></ul>
    9. 9. <ul><li>Wills </li></ul><ul><li>Power’s of Attorney </li></ul><ul><li>Probate Fee Planning </li></ul><ul><li>Trusts: Tax and Non-Tax Uses </li></ul><ul><li>Taxation of Estates & Tax Planning Strategies </li></ul><ul><li>US Estate Tax </li></ul><ul><li>Insurance as an Estate Planning Tool </li></ul>Estate Planning
    10. 10. Wills Estate Planning
    11. 11. <ul><li>Why a Will? </li></ul><ul><ul><li>Who gets what </li></ul></ul><ul><ul><li>When they get it </li></ul></ul><ul><ul><li>And who controls the process </li></ul></ul><ul><ul><li>Avoids cost and delay </li></ul></ul><ul><ul><li>Minimize family disputes </li></ul></ul><ul><ul><li>Opportunity for planning/savings </li></ul></ul>
    12. 12. <ul><li>What if there is no Will? </li></ul><ul><ul><li>Distribution by provincial formula </li></ul></ul><ul><ul><li>Administrator appointed by Court </li></ul></ul><ul><ul><li>Assets in limbo </li></ul></ul><ul><ul><li>Loss of investment and management powers and trust options </li></ul></ul>Estate Planning
    13. 13. <ul><li>Assets Passing Outside Will </li></ul><ul><ul><li>Joint ownership </li></ul></ul><ul><ul><li>Designated Beneficiary </li></ul></ul><ul><ul><li>Assets in Trusts or Corporation </li></ul></ul>Estate Planning
    14. 14. Powers of Attorney (POA)
    15. 15. <ul><li>What is a POA </li></ul><ul><ul><li>Ensures proper management of property and financial affairs in the event of mental incapacity or extended absence </li></ul></ul><ul><ul><li>Affairs managed for your benefit </li></ul></ul><ul><ul><li>Can have restrictions </li></ul></ul><ul><ul><li>May be limited in time </li></ul></ul><ul><ul><li>Can be continuing </li></ul></ul>Estate Planning
    16. 16. <ul><li>POA for Personal Care </li></ul><ul><ul><li>Attorney appointed to make medical decisions for you </li></ul></ul><ul><li>Living Will </li></ul><ul><ul><li>Specify your medical instructions </li></ul></ul><ul><ul><li>Proxy can be named to carry out your instructions or make decisions not covered in the will </li></ul></ul>Estate Planning
    17. 17. Probate Fee Planning
    18. 18. <ul><li>How Fees are Calculated? </li></ul><ul><ul><li>On value of estate </li></ul></ul><ul><ul><li>No maximum in Ontario </li></ul></ul><ul><ul><li>Excludes </li></ul></ul><ul><ul><ul><li>Real property outside province </li></ul></ul></ul><ul><ul><ul><li>Property jointly held with right of survivorship </li></ul></ul></ul><ul><ul><ul><li>Insurance and registered plans with designated beneficiaries </li></ul></ul></ul>Estate Planning
    19. 19. <ul><li>Strategies </li></ul><ul><ul><li>Assets pass outside the will </li></ul></ul><ul><ul><li>Gifts prior to death </li></ul></ul><ul><ul><li>Alter ego or joint partner trusts </li></ul></ul><ul><ul><li>Dual Wills – Two Wills </li></ul></ul>Estate Planning
    20. 20. Trusts: Tax and Non-Tax Uses
    21. 21. <ul><ul><li>Concept </li></ul></ul><ul><ul><li>Separation of legal and beneficial ownership </li></ul></ul><ul><ul><li>Trustee has legal title </li></ul></ul><ul><ul><li>Beneficiary has benefits </li></ul></ul>Estate Planning
    22. 22. <ul><ul><li>Testamentary </li></ul></ul><ul><ul><ul><li>Get marginal tax rates of individual </li></ul></ul></ul><ul><ul><ul><li>Trustee chooses year end </li></ul></ul></ul><ul><ul><ul><li>No attribution!!!! </li></ul></ul></ul><ul><ul><li>Inter Vivos </li></ul></ul><ul><ul><ul><li>Top personal rate </li></ul></ul></ul><ul><ul><ul><li>Calendar year end </li></ul></ul></ul><ul><ul><ul><li>Attribution </li></ul></ul></ul>Estate Planning
    23. 23. <ul><ul><li>Taxation </li></ul></ul><ul><ul><li>Trust is a flow through vehicle for tax purposes </li></ul></ul><ul><ul><li>Income can be taxed in the trust or in the beneficiaries hands </li></ul></ul><ul><ul><li>Trusts effective to split income </li></ul></ul><ul><ul><li>Discretionary trusts give best tax effective opportunities </li></ul></ul>Estate Planning
    24. 24. Taxation of Estates & Tax Planning Strategies
    25. 25. <ul><li>Capital Gains </li></ul><ul><li>Deemed sale at Fair Market Value for all capital property at time of death </li></ul>Estate Planning
    26. 26. <ul><li>Registered Plans </li></ul><ul><li>Fully taxable in year of death </li></ul><ul><li>Spousal rollover available </li></ul><ul><li>Other limited rollovers </li></ul>Estate Planning
    27. 27. <ul><li>Business Owners </li></ul><ul><li>Estate freezing </li></ul><ul><li>Capital gains exemption: </li></ul><ul><li>Post mortem planning </li></ul><ul><li>Multi discipline – complex planning </li></ul>Estate Planning
    28. 28. US Estate Tax
    29. 29. <ul><li>Taxation of worldwide income: </li></ul><ul><ul><li>Residency immaterial </li></ul></ul><ul><li>Value vs. Gains </li></ul><ul><ul><li>US has gift tax, estate tax on value, “Worldwide Property” </li></ul></ul><ul><ul><li>Canada – income tax on capital gains, only “estate tax” is provincial probate fees </li></ul></ul>Estate Planning
    30. 30. <ul><li>Guidelines: </li></ul><ul><li>No US Estate Tax if WWP within Exclusion Amount for year of death </li></ul><ul><li>If value of US property exceeds $60,000US US Estate Tax may be payable </li></ul><ul><li>The greater the value of US property and WWP the greater the likelihood of US Estate Tax Payable </li></ul>Estate Planning
    31. 31. <ul><li>All property owned by deceased wherever located </li></ul><ul><li>100% value of jointly held property unless contribution by other owners proved </li></ul><ul><li>Includes assets not normally thought of as part of an estate – different from probatable assets </li></ul><ul><ul><li>RRSPs, RRIFS, value of defined benefit plans </li></ul></ul><ul><ul><li>Proceeds of insurance </li></ul></ul><ul><ul><li>Assets in controlled trusts for benefit of deceased – i.e. alter ego trusts </li></ul></ul><ul><li>Similar rules for US and non US citizens </li></ul>Estate Planning
    32. 32. <ul><li>Strategies </li></ul><ul><li>Do nothing </li></ul><ul><li>Wait and see </li></ul><ul><li>Look at planning strategies </li></ul><ul><li>Divest US content </li></ul>Estate Planning
    33. 33. Insurance as an Estate Planning Tool Estate Planning
    34. 34. <ul><ul><li>Use to pay capital gains taxes without selling asset – recreational property (cottage), other personal use assets </li></ul></ul><ul><ul><li>Preserve value of RRSPs </li></ul></ul><ul><ul><li>Equalize distribution of assets </li></ul></ul><ul><ul><li>Create wealth and enhance income on tax favoured basis </li></ul></ul><ul><ul><li>Costs less than the tax </li></ul></ul>Estate Planning
    35. 35. Legacy Planning
    36. 36. <ul><li>Charitable Giving </li></ul><ul><ul><li>One-time gift </li></ul></ul><ul><ul><li>Community Foundation </li></ul></ul><ul><ul><li>Life insurance designation </li></ul></ul><ul><ul><li>Designation on RSP/RIF </li></ul></ul>Estate Planning
    37. 37. Summary
    38. 38. Estate Planning <ul><ul><li>Get qualified advisors </li></ul></ul><ul><ul><li>Your plan must fit you </li></ul></ul><ul><ul><li>Anticipate the unexpected as well as the expected </li></ul></ul><ul><ul><li>Carry through your planning to completion </li></ul></ul><ul><ul><li>Review your plan every five years or when your life changes </li></ul></ul><ul><ul><li>Carry through your planning to completion </li></ul></ul><ul><ul><li>Make your plan flexible and appropriate </li></ul></ul><ul><ul><li>Involve family members </li></ul></ul>
    39. 39. <ul><li>Why? </li></ul><ul><li>70% of wealth transition have been found unsuccessful </li></ul><ul><li>Assists with transition </li></ul><ul><li>Addresses potential conflict now </li></ul><ul><li>Ensures wishes are communicated and (hopefully) understood </li></ul>Estate Planning
    40. 40. Plan While You Can Not When You Must (or Can’t) Estate Planning
    41. 41. Plan While You Can Not When You Must (or Can’t) Estate Planning
    42. 42. <ul><ul><li>Planning for your death doesn’t accelerate its date. </li></ul></ul><ul><ul><li>Not planning for it doesn’t postpone it. </li></ul></ul>Estate Planning
    43. 43. Working with You Estate Planning
    44. 44. <ul><li>The Process </li></ul><ul><ul><li>Detail what you want to do </li></ul></ul><ul><ul><li>Review and inventory your assets </li></ul></ul><ul><ul><li>Assessment of your estate’s tax liability </li></ul></ul><ul><ul><li>Discussion of alternatives </li></ul></ul><ul><ul><li>Package to go to estate lawyer </li></ul></ul>Estate Planning
    45. 45. <ul><li>Benefits </li></ul><ul><ul><li>Detailed and documented analysis of your estate for … </li></ul></ul><ul><ul><ul><ul><li>You </li></ul></ul></ul></ul><ul><ul><ul><ul><li>your family </li></ul></ul></ul></ul><ul><ul><ul><ul><li>your executors </li></ul></ul></ul></ul><ul><ul><ul><ul><li>an estate lawyer </li></ul></ul></ul></ul><ul><ul><li>Less time spent with lawyer = less cost to you </li></ul></ul>Estate Planning
    46. 46. <ul><li>Geoffrey Parker, CFA, CFP, CSA </li></ul><ul><li>  </li></ul><ul><li>&quot;Planning for Your Peace of Mind“ </li></ul><ul><li>  </li></ul><ul><li>905-470-9940,304 </li></ul><ul><li>[email_address] </li></ul><ul><li>  </li></ul>Handing Down the Cottage
    47. 47. Thank you

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