Estate Planning

Estate Planning

Even in this modern world of instant communication and knowledge, I am astounded by how little attention is given to planning for our inevitable death. In my previous career as an attorney, I learned the importance of wills – not just the simple statement of distribution of assets to loved ones, but the appointment of competent Executors and Guardians. My clients know how I emphasise the importance of wills and regular revisions of their provisions.

PLEASE NOTE THAT I DO NOT PREPARE WILLS NOR OFFER ADVICE ON THEIR CONTENT – THESE TASKS ARE FOR LAWYERS.

In my years in this business, I have encountered too many instances when investors have passed away and have left either no or inadequate wills. This has resulted in heartache for families or even angry disputes.

“Canada has no federal estate or inheritance, nor do any of the provinces. To the extent that you simply have cash in the bank and you leave it to your family, there would be no tax to pay at all, other than probate fees.”

“Many people, however, have capital assets such as stocks, real estate and jewellery. Generally, capital assets are deemed to have been sold immediately before death at their fair market value, thus triggering a capital gain on all of the increase in value that has accrued since the assets were purchased.”

SOURCE: TAX PLANNING FOR YOU AND YOUR FAMILY 2018 BY KPMG

Competent estate planning would include reviewing the client’s total inventory of:

  • Registered and non-registered investments wherever located,
  • Real estate and which is classed as the principal residence (not taxable),
  • Jewellery,
  • Paintings,
  • Other hard assets, and
  • Interests in businesses as owners or partners.

Against that, a review of any life insurance that is in force, and whether additional coverage would be necessary to cover capital gains tax. There may opportunities for gifting assets, adding holding companies and/or freezes, but these need detailed investigation.

At Pathwise, we often quarterback estate planning with clients and their professional advisors – there are no boilerplate solutions.