Chapter 1: What is Estate Planning? // 1
Regardless of your age, the issue of estate planning, in conjunction with your will, is an essential element of life planning. However, at different stages of your life, certain issues may arise that require different estate planning strategies.
Chapter 2: What Assets Will You Have? // 7
You could be quite surprised once you assess the current and projected value of your estate. After you read this chapter and complete the net worth statement in Appendix D, speak to your professional advisor and decide on the best approach to meet your wishes. How Much Are You Worth? ● Pension Plans – Government and Employer ● Your Own Tax- Sheltered Pension Plans ● Your Home as an Additional Source of Income ● Insurance for Your Present and Future Needs ● Are You Protected Against Default? ● Keeping Track of Risk
Chapter 3: Building Your Estate // 33 Three Elements of Wealth Accumulation: Saving, Investing and Preserving Capital
Chapter 4: Understanding Wills // 43
It is estimated that only one out of three adults has a will, which means that two-thirds of Canadians die with their wishes unmet. A will is an important legal document that can ensure that your assets will be distributed to the beneficiaries of your choice in the way you wish. What Happens If There is No Will? ● What’s in a Will? ● Reflecting Your Wishes ● Writing a Memorandum to Your Will ● Keep Your Will Current ● How to Change Your Will ● Revoking Your Will ● Is Your Will Valid in the U.S.? ● Preparing a Will ● Benefits of Using the Services of a Trust Company ● The Complementary Document – Power of Attorney ● Protecting Yourself in All Circumstances ● Selecting an Executor ● Selecting a Trustee ● Selecting a Guardian for Your Children ● Impact of Family Law Legislation ● Fees and Expenses ● How to Avoid Your Will Being Contested
Chapter 5: Understanding Powers of Attorney and Living Wills // 75
You will probably want to give authority to others to act on your behalf at some point in your life. Whether it is to help or take charge of financial situations or medical care, the power of attorney is the document that will allow you to choose your designate and set out the guidelines that you wish to be followed. Designating Power of Attorney ● Living Wills
Chapter 6: Understanding Trusts // 91
Trusts are a very common way of dealing with a range of personal choice, family or business options and, as you will see, are not just for the rich with complex financial affairs. Types of Trusts ● The Creative Use of Living Trusts ● Creating a Testamentary Trust ● Selecting a Trustee ● Benefits of Using the Services of a Trust Company ● What are the Fees and Expenses? ● Outlining Everything in a Trust Agreement ● The Tax Implications of a Trust
Chapter 7: Understanding the Probate Process // 109
While not all estates must go through the probate process, most estates do. Basically, the probate process ensures that your executor, or the administrator of your estate, is legally confirmed and that your will is approved by the courts. What is Probate? ● Administration of the Estate ● Responsibilities of the Executor/Administrator ● Fees for Executors ● Personal Liability of the Executor ● Making the Most of It – Reducing Probate Fees
Chapter 8: Death and Taxes // 125
Don’t be fooled – just because there is no inheritance tax, as such, in Canada; the beneficiaries of your estate will incur a significant amount of tax in the settling of your estate unless you do an effective job in planning your estate for tax minimization. The History of Estate Taxes in Canada ● Capital Gains Taxation in Canada ● Capital Gains Taxation on Death ● Capital Gains Taxation on Gifts During Your Lifetime ● Other Taxes that Could Be Payable by an Estate
Chapter 9: Dealing with the Tax Department and Estate Administration // 147
The final “moments of reckoning,” in terms of estate administration, are the filing of your final tax return. It is your executor’s responsibility to see that all of your debts are paid – even the ones to the Canada Revenue Agency. Income Tax Returns for the Deceased ● Special Tax Rules Applicable to Deceased Taxpayers ● Tax Returns to Be Filed by the Executors for the Estate ● Winding Up the Estate
Chapter 10: Tax Planning Strategies // 159
Tax “planning” as opposed to tax “evasion” is perfectly legal. While this chapter won’t make you an expert, the odds are that at least one of the strategies outlined will help you minimize the future taxes payable in your estate. Your Primary Tax Planning Goals ● Your General Estate Planning Objectives ● Transferring Property to Your Spouse ● Utilizing the $750,000 Capital Gains Exemption for Small Business Corporation Shares ● Utilizing the Farm Property Rollover ● Estate Freezing ● Using Family Trusts for Income Splitting and Estate Planning
Chapter 11: Tax and Estate Planning if You Own U.S. Assets // 173
As if the tax laws of one country weren’t enough, you may be subject to the tax laws in both Canada and the United States if you live in the U.S. part-time or own property or other investments there. Do U.S. Tax Laws Apply to You? ● Residency and the Tax Treaty ● Summary of Guidelines Regarding Filing a U.S. Income Tax Return ● The IRS Wants Your Number ● The IRS Has Your Number ● Deadlines for Filing with the IRS ● Rental Income from U.S. Real Estate ● Selling Your U.S. Real Estate ● U.S. Gift Tax ● Possible Simultaneous U.S. and Canadian Taxes on Death ● The Canada/U.S. Tax Treaty ● Strategies for Reducing U.S. Tax on Your U.S. Assets
Chapter 12: Vacation Properties // 195
Vacations are a time to relax and forget your worries. Financial concerns and capital gains taxes should be the last thing on your mind. This chapter will provide some ideas for dealing with vacation properties in your estate planning. Keeping Things in Perspective ● The Principal Residence Exemption ●Will Planning and Your Vacation Property ● Planning Strategies for Your Vacation Home ● Should You Pay Tax Now or Later? ● Buying Life Insurance to Cover Future Tax Liabilities ● Using a Corporation to Own Your Vacation Property
Chapter 13: The Family Business // 213
With more than 100,000 family businesses in Canada, they have been the driving force building and sustaining our economy from Confederation to the present time. This chapter will help you create an effective succession arrangement and estate plan. The Importance of Having a Plan ● The Planning Process ● Tax Planning in the Family Business ● Shareholder Agreements ● Creditor-proofing Your Business
Chapter 14: Charitable Giving and Philanthropy // 233
Many of the greatest works of art are on display in public art galleries and museums for all to enjoy because of the philanthropy of past Canadians. Charitable donations can be made in many different ways – cash, works of art, marketable securities. Choosing the best method will maximize your income tax saving. Tax Incentives for Charitable Gifts ● Types of Donations ● Private Foundations
Chapter 15: Life, Health and Disability Insurance // 245
You must choose according to your needs from among the many types of life, health and disability insurance. The type of insurance you choose can play an important role in your estate planning strategy. Identifying the Need for Life Insurance ● Types of Life Insurance ● Choosing an Insurance Agent ● Choosing a Life Insurance Company ● Comparison of Group Over Individual Insurance
● Income Tax Treatment of Life Insurance ● Health and Disability Insurance ● Business- Related Insurance
Chapter 16: Selecting Professional Advisors // 267
Selecting the professional advisors that “fit” you is vital to protect your tax and estate planning interests. This chapter will outline the qualities and qualifications to look for in a lawyer, an accountant, a financial planner and other financial and investment advisors. General Factors to Consider When Selecting an Advisor ● Selecting a Lawyer ● Selecting an Accountant ● Selecting a Financial Planner ● Other Financial and Investment Advisors
Chapter 17: Selecting Retirement Residences and Care Facilities // 293
Whether by choice or circumstance, you may need to enter a retirement residence or care facility in your later years. Use this chapter and the checklists to plan and choose wisely. What is a Retirement Residence? ● What is a Care Facility? ● Regulation, Licensing and Accreditation
Chapter 18: Planning Your Funeral // 301
In the midst of the grief and sorrow of losing a loved one, responsibilities have to be faced and decisions made consistent with the philosophical and spiritual beliefs of the deceased. Information in this chapter will help you make those decisions wisely and with confidence. What is a Funeral? ● Arranging Your Funeral Services in Advance ● Make Your Funeral or Memorial Service More Memorable ● Expressions of Sympathy ● When Death Requires an Autopsy ● Documents and Permits ● Support Services ● Making the Arrangements Yourself ● Selecting a Funeral Provider ● Understanding Funeral Costs ● The Funeral Service ● Burial or Cremation? ● The Availability of Financial Benefits and Assistance ● Organ Donation and Medical Research
Appendix A: Sources of Information // 323
One of the challenges of research is to know where to start. This Appendix will save you a great deal of time, energy, money and hassle.
Appendix B: Samples // 335
Samples of documents discussed throughout the book will provide you with some more ideas, but these are for illustration only and must not be used as do-it-yourself documents.
Appendix C: Charts // 349
The handy charts in this Appendix will provide some points of comparison on topics discussed throughout the book.
Appendix D: Checklists // 357
These checklists will help you take stock of your current situation and focus on your future goals.
Glossary // 401
The definitions here will ensure that you and your professional advisors are speaking the same language.
Index // 409 About the Authors // 417 Reader Input and Educational Seminars // 418