Don’t Leave Loved Ones Unprepared
Estate planning is complicated and often overlooked, or more often than not, avoided. Nonetheless, it is a matter that really does need a bit of your attention now. Depending on the size of the estate and the individuals involved, it may be appropriate to involve lawyers, investment advisers, accountants/tax advisers. It may even be necessary to have religious advisers or psychological counselors participate in order to deal with some of the moral or emotional issues that estate planning can encompass.
It’s best to get things in order sooner than later!
- Write a will, even though there is nothing wrong with you or your family
- Think of the tax and insurance implications of life, disability, accident or critical illness
- Use a Health & Welfare trust so the medical expenses you pay will be tax deductible
- Get a tax-free savings account (it can hold various types of investments, too!), and contribute to RRSPs, RDSPs or RESPs as much as possible
- Get a business partnership agreement set up to take care of financial trouble should you or your partner pass on, or a disagreement develop
- Insure your business partners
- If incorporated, structure share ownership carefully to allow sharing of income and wealth among family members
- Consider the benefits of setting up a personal trust, a spousal trust, a trust for your kids, a testamentary trust, or an inter-vivos
- If beneficial, ask about the best way to set one up and when.Learn about the benefits of rollovers to trusts and capital beneficiariesConsider your need for an estate freeze
Clearly Accounting in Vancouver can help you get on the right track to achieving your goals and keep it simple at the same time. Clearly Accounting can focus on helping you best by advising on the tax implications of your plans, acting as a Trustee when necessary, and/or assisting with estate administration and tax minimization.
In Canada, specific estate or succession taxes are not assessed on the death of an individual. However, there are many things that need to be done in a timely manner to minimize final income taxes that are assessed on death. An individual’s death has many income tax implications such as:
- Deemed dispositions of property
- An accrual basis of reporting for income in the year of death
- Potentially, the requirement to file multiple tax returns
Further complications may arise if the individual owned property in a foreign jurisdiction that imposes foreign estate and income taxes—which is the case in the USA.
The person administering the estate of the deceased (known as the personal representative or executor) should be aware of the tax pitfalls, as well as the planning opportunities that may result in tax savings. As well, the personal representative must be mindful of the personal risk he or she bears for any outstanding tax liability of the deceased or the estate if the estate property is distributed without the appropriate tax clearance certificates.Not to worry though, Clearly Accounting will help you through this maze of complexities to ensure your loved one’s wishes are carried out accordingly.