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Planning Ahead- Estate Planning Basics

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Get organized before you're not around to do it!

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Planning Ahead- Estate Planning Basics

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

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