The world of trusts is fascinating, if not somewhat enigmatic. Trusts, in general, are an important part of estate planning because of the beneficial tax treatment of testamentary (arising as the result of a death) trusts. However, trusts are used by parents and others for a variety of specific purposes besides tax planning. Over the next few weeks, I will offer a brief introduction to some of the ways that trusts are used to protect a child’s inheritance. (more…)
Archive for the ‘Estate Planning’ Category
Protecting My Child’s Inheritance – Understanding How Trusts Can Help (Part 1)
Monday, March 1st, 2010
Valentine’s Day. Thinking about loved ones? Want to really show them you care?
Sunday, February 14th, 2010Although getting a Will done ranks right alongside a trip to the dentist, having an up-to-date Will is an expression of caring that can ease the sorrow of your passing. Dying without a Will leaves your grieving loved ones puzzling over why you didn’t care enough to get it done and wondering how to deal with the resulting chaos.
For some of us with few assets and if no one is expecting to have access to our assets, Ontario’s intestacy laws (how an estate is distributed upon death if there is no Will) may be enough. For example, if a married person dies without kids and having most assets jointly-held with his or her spouse, the surviving married spouse gets it all. If the deceased was single and never had kids, his or her parents share the estate. However, having died without a Will means that it will take longer to access the assets and settling the estate will require more time and money.
The distribution dictated by Ontario’s intestacy laws is, in our experience, rarely what people expect and may come as a bit of a surprise. For example, Chris’ marriage ended three years ago but no separation agreement was ever signed. (more…)
Feeling Good – Charitable Gifting by Will
Friday, February 5th, 2010With Valentine’s Day approaching, we thought it appropriate to turn our attention to charitable giving. Whether you want to honour a favourite charity, remember a loved one or a special time in your life or simply reduce taxes, charitable giving should be considered as part of your estate planning.
When naming a charity as a beneficiary in a Will, most specify a cash gift (referred to as a ‘legacy’) of a certain dollar amount or the donation of an item of value such as artwork or securities (referred to as a ‘bequest’). From a tax standpoint, a gift in a Will is generally deemed to have been made immediately before the date of death. As a result, a tax credit can be claimed on the final tax return. A tax credit is a deduction in computing tax which would otherwise be payable. (more…)
An Estate with no Executor?
Sunday, January 24th, 2010During the estate planning process, many important decisions must be made. Although most people focus on who will get their estate, another important decision is who to appoint as executor (also referred to in Ontario as an ‘estate trustee’). Both a primary (your first choice) and one or more alternate executors should be named in case the first choice is unable to do the job. A recent and interesting article by Susan Hughes, entitled “No executor required” published in the November/December 2009 issue of the Canadian Lawyer, shows just how important this choice can be.
Hughes reviews a recent Ontario case, Evans v. Gondor, in which a most interesting situation arose. At their request, the court removed the executors who had been named in the deceased’s Will. The executors, the deceased’s sister and brother-in-law, no longer wished to act and there was no replacement named. This left the estate without an executor. (more…)
Avoiding Probate Fees on Insurance Proceeds
Thursday, January 14th, 2010If 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…)
When a Child Inherits (Part 2 of 2)
Thursday, January 7th, 2010If there is no trust in the Will, an executor may wish to pay the child’s inheritance into Court. By doing so, the executor is discharged from further responsibility to the extent of the amount paid into Court. The executor does not need to monitor the Court’s handling of the money, how it is invested, or keep any further records.
When a minor child is left an inheritance, the Office of the Children’s Lawyer (OCL) may become involved. An office within the Ministry of the Attorney General for Ontario, the OCL’s mandate is to represent personal and property rights of minors and unborn children, including estate and trust matters.
Parents may also be surprised to learn that when a child reaches the age of 18, he or she can demand that the inheritance be handed over to him or her if the inheritance is not being held in a trust. The child can also demand a full accounting of all transactions affecting the inheritance unless previously approved by the Court.
A parent (or other person leaving a gift to a child) who wishes to defer payment of the child’s inheritance beyond the age of 18 can include a trust in his or her Will. In a trust, the parent can specify that partial payments of the inheritance are to be made at various ages with income (what the trust assets earn) being paid out regularly.
Everything You Wanted to Know About Probate
Friday, December 18th, 2009What 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…)
When a Child Inherits (Part 1 of 2)
Tuesday, November 24th, 2009If you are the parent of a child under 18 (referred to as a ‘minor’), you may wonder what happens if your child inherits. There are a number of ways that a child may inherit:
- the child could be named as a beneficiary in a Will;
- the child could inherit from a relative who dies without a Will (referred to as ‘dying intestate’) if the child is one of the legal beneficiaries under the intestacy laws of Ontario; or,
- the child could be named as a beneficiary of a life insurance policy or any other asset where a beneficiary can be named, such as a segregated fund, an RRSP/RRIF, or death benefit. (more…)
Part 2: Who Cares for a Young Child if Both Parents Die?
Friday, October 23rd, 2009Part 2 of 2
Many parents, whether biological or adoptive, are surprised to learn that they do not have the right to name a permanent custodian of minor children. Ontario law gives the court a supervisory role over all custodian appointments and such appointments are based upon what the court considers to be the best interests of the child. (more…)
Part 1: Who Cares for a Young Child if Both Parents Die?
Sunday, October 18th, 2009This is Part 1 of a 2-part blog
Although not a subject many parents like to think about, parents of a minor child (under the age of 18) should consider who will look after their child if both parents die. This is a decision often debated and agonized over but, all too often, ignored. Hopefully, the information provided in this 2-part blog will help you make an informed decision and will encourage you to put that decision in writing. (more…)