Archive for the ‘Avoiding Probate’ Category
Monday, March 19th, 2012
That’s all it takes. One signature can completely undo the most careful estate planning. Just what am I talking about? Let me tell you about Jim (not his real name) who met with me recently to review his estate plan. We talked about his unique family situation, what he owned, who he wanted to benefit and why.
Jim was married with one little boy. He also had an older daughter from a previous marriage. She lived with Jim and his family as Jim had sole custody. Although Jim loved both of his children equally, he felt that his daughter should receive something extra from his estate. He reasoned that his son would inherit from both Jim and Shawna as well as from Shawna’s parents who were quite wealthy. However, his daughter’s mother had disappeared years ago and was unlikely to leave anything for her. (more…)
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Wednesday, June 1st, 2011
An estate plan needs to be tailored to the specific circumstances of the individual for whom it is created. There is definitely no ‘one size fits all’ in the world of estate planning! Some of the most complicated situations are those involving second marriages (or common law relationships), particularly where each partner has children from previous relationships and assets in his or her own name as well as assets owned jointly by the two of them.
We find that spouses often want an estate plan that considers the financial needs of the surviving spouse as well as ensuring his or her own children benefit. For example, (more…)
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Friday, May 20th, 2011
Perhaps influenced by ‘reading of the Will’ scenes in movies, clients often come to us with the idea that they will give away their estates asset by asset; for example, the house to their son, the cottage to their daughter, a bank account to a cousin, the car to a friend — you get the idea. There are exceptions, of course, but generally it is not a good idea to (more…)
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Monday, April 26th, 2010
A: There is generally no need to update a Will just because you have opened a TFSA account. All assets including a TFSA that you own solely and which are not designated to a beneficiary become part of your estate on death. You can only name a beneficiary for assets such as life insurance, RRSPs, RRIFs, segregated funds and TFSAs. If you name a beneficiary for your TFSA, it will pass directly to that person, if he or she is alive, on your death and will not be subject to probate fees.
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Thursday, January 14th, 2010
If the deceased named a beneficiary on a life insurance policy on the deceased’s life, the surviving beneficiary receives the proceeds directly. The insurance proceeds are not included in the value of the estate for purposes of calculating probate fees. However, if the beneficiary has predeceased and no contingent beneficiary has been named, the insurance proceeds are payable to the estate and are included in the value of the estate for probate purposes. (more…)
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Friday, December 18th, 2009
What Is Probate?
Probate is the process of legally establishing the validity of a will. As a result, the Court confirms the appointment of an Estate Trustee (or Executor). The Estate Trustee administers and distributes the estate of the deceased person. An Estate Trustee may be appointed with or without a Will. If there is a Will, the Court issues a Certificate of Estate Trustee with a Will. If there is no Will, the Court issues a Certificate of Estate Trustee Without a Will and the estate is distributed according to Ontario’s intestacy laws. When a person dies without a Will, they are said to have died “intestate”.
When Is Probate Needed? (more…)
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Tuesday, September 8th, 2009
If you have been following my blogs on this topic, you will, by now, be wondering if it should have been titled ‘How Not to Avoid Probating a Will’. Admittedly, that might be a better title.
Although I rarely recommend that a parent try to avoid probate between generations because of the many problems that I have outlined in previous blogs, there may be situations where it is a good idea. (more…)
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Thursday, September 3rd, 2009
We find that a parent will add a son or daughter as a joint owner of the parent’s bank account or other asset to avoid probate fees or to ensure the son or daughter has ready access to funds if the parent falls ill or dies. If the parent’s intention was that the son or daughter actually own the asset upon the parent’s death, it is essential that the parent make that intention clear either in his or her Will or in some other form preferably in writing. Some clear evidence of intention is important as the Supreme Court of Canada has ruled that bank accounts held jointly between a parent and child are generally considered part of the parent’s estate assuming that the child did not contribute to the asset. There are exceptions to this rule, however, such as where the joint owner is a minor child (under the age of 18) or an incapable child.
Although the estate assets held jointly with an adult, capable child are considered part of the parent’s estate, without the co-operation of the joint-owner child, other children of the deceased parent may have to take their sibling to court to recover a share of the bank account if the joint-owner child does not co-operate. (more…)
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Wednesday, August 26th, 2009
Previous blogs explained what ‘probate’ is, how the estate administration tax (popularly called “probate fees”) are calculated and how spouses might be able to arrange their affairs to avoid probate on the death of the first to die.
As noted previously, avoiding probate from one generation to the next is much more problematic. Generally, I advise clients that avoiding probate between generations is nearly always a poor idea due to the problems that can be created. As I work exclusively in the area of wills and estates, I see many attempts to avoid probate that end up being more costly than the estate administration tax and, worse yet, cause other unexpected and often serious problems that the deceased did not anticipate.
For example, adding a child’s name to the title of a parent’s home means that the child is now required to sign if the parent decides to sell, re-finance, or otherwise deal with the property. In addition, under Canadian income tax law, each person or couple may have one principal residence which enjoys an exemption from capital gains tax. However, if a child is added to the title of the parent’s home and the child already owns a home of his or her own, the capital gains tax exemption may be compromised. And, if the child is subject to the claims of a creditor or an ex-spouse, the parent’s home could be available to settle the claim.
Continued in Part Four
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Sunday, August 23rd, 2009
Understandably, many of our clients wish to avoid probate. To explore how this might be done, if at all possible, it is essential to review the ownership of all assets, beneficiary designations, family relationships, tax implications as well as relationships among family members and the goals of the client. Only then can we recommend what steps should or should not be taken to avoid probate. Avoiding probate is usually possible when one spouse dies leaving a surviving spouse. For example, probate is not generally required if the spouses own assets jointly or where an asset, such as life insurance, is payable to the surviving spouse by way of a beneficiary designation. (more…)
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