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Assets Passing Outside of an Estate

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This SlideShare presentation describes assets passing outside of an estate.

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Assets Passing Outside of an Estate

  1. 1. Assets Passing Outside of an Estate 1
  2. 2. 2 Assets Passing Outside of an Estate • Typically, the claim that an individual brings against an estate is limited to the recovery of assets held by the estate at time of death. • Other assets that are transferred outside of an estate may pass “outside of” the deceased’s estate, rather than in accordance with the terms of his or her Last Will and Testament. • As a result, just because one is named as a beneficiary under a Will does not mean that there will not be other beneficiaries who benefit from assets that are not administered in accordance with its terms.
  3. 3. 3 Life Insurance Policies • The owner of a life insurance policy has the opportunity to name a specific beneficiary to the proceeds paid out by the policy after death. Beneficiary designations are usually revocable, meaning that the owner of the policy may change the beneficiary if he or she chooses to do so. • If no beneficiary is designated for a life insurance policy, the proceeds will instead fall into the estate and be distributed in accordance with the terms of the Will. • If a Will is subsequently executed and specifically refers to and revokes a beneficiary designation, the policy proceeds may be paid out to the estate. • Beneficiary designations may determine the beneficiary to whom other types of assets will also be transferred, such as funds held in Tax-Free Savings Accounts and Registered Retirement Income Funds.
  4. 4. 4 Jointly-Held Assets • Individuals who are joint owners of an asset have a right of survivorship and will receive joint property directly as the last surviving joint owner. • Note that joint ownership differs from tenancy in common in that a tenant in common does not have a right of survivorship. • In the case of assets jointly held with an adult child, however, a presumption of resulting trust typically applies. Absent evidence that the jointly-held property was intended to pass to the survivor, the assets may be considered to be held by a surviving adult child in trust for his or her parent’s estate. • It is also possible to sever a joint tenancy while joint owners are still living. The result will be that the ownership is divided and held as tenants in common, with no right of survivorship.
  5. 5. 5 Inter Vivos Gifts • Sometimes a person will choose to dispose of assets during his or her lifetime. • Gifting provides the donor of the gift with the opportunity to see the recipient of the gift enjoying its benefit. • Disposing of certain assets prior to death may prevent disputes over items as assets of an estate. • It is more difficult for a donor to seek to undo a gift if his or her mind is later changed with respect to the desired beneficiary.
  6. 6. 6 Property Subject To Trust • The beneficial interest in an asset can also be transferred to the next generation using a trust. • The creator of the trust (settlor) can retain some control over the trust property before he or she dies as trustee or through the terms of the trust.
  7. 7. 7 Exceptions • Notwithstanding that certain assets may pass outside of an estate, they may be clawed back into the estate for the purposes of funding a claim for dependants’ support. • Section 72 of the Succession Law Reform Act provides that any of the classes of assets referred to in the previous slides shall be deemed to be part of an estate for the purposes of calculating and funding the provision of support to a dependant. • Creditors of an estate may also have a claim against these types of assets if it can be shown that they were transferred in a deliberate attempt to conceal assets that would otherwise fall into the estate and be subject to the claims of creditors.
  8. 8. 8 Thank you for reading!

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