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Can you avoid capital gains tax?

estate planning tax Nov 28, 2018

Most clients ask our office to draft Wills and estate plans that will help them avoid capital gains. This is an impossible wish. Some people will attempt to sell the property to a family member for less then fair market value. This results in any Capital Gain being taxed twice as the gain will be taxed in both the deceased and the family member’s hands. Thus, no net savings.

Some people believe that placing a family member joint on title with them will avoid capital gains. However, the Canada Revenue Agency legislates this as a partial distribution and the client must pay tax on half the gain as soon as it’s transferred. To make matters worse, they must pay tax on half the gain again when they die. Even though the property will transfer easily upon death because it is jointly owned, CRA will still treat it as a disposition. Again, thus no net savings.

The one way you can avoid paying capital gains tax entirely is if you donate publicly-traded securities to a charity....

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Does adoption affect inheritance?

inheritance Nov 07, 2018

Most Wills state that the estate must be shared among the testators children. In many families, it’s obvious who the “children” are while in other families it is less so. An adopted child’s rights against a biological or adoptive parent are very different under Alberta law. When an adoptive parent passes away, an adopted child has exactly the same legal status as a biological child born to that parent. When the Will makes a gift to “my children”, adopted children will be treated the same as biological children. If the biological parent leaves a Will that divides the estate among his or her children, this will not include the child who has been adopted by someone else. According to the  law, that the child is no longer that person’s child, because of the adoption. A child who is raised in a family that treats the child as its own, but never formally adopts the child, is not an adopted child.

If you have been taking care of a child that...

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Beware of Choosing a US Resident as Your Executor

estate planning executor Oct 31, 2018

The global reach of our economy has provided increased opportunities for our family members to work and study outside of Canada. More and more, our family members are moving to other countries to gain experience, launch their professional careers and take advantage of exciting opportunities.

When creating an estate plan, many families look to their adult relatives to act in the role of Executor and trustee of their Wills. Choosing a competent person for this role is critical to the ensure a smooth transition of wealth to your beneficiaries. But what if your Executor resides in a foreign jurisdiction?

It is much more onerous on the Executor to administer an estate from a different country, creating delays, increased travel and expenses to the estate. However, even more important concerns arise when an Executor is resident in the United States.

1st Issue: Posting a Bond

In Alberta, the law requires non-residents to post a bond in order to act as Executor and estate trustee. The...

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Should you preplan your funeral?

demise Oct 24, 2018

Preplanning your funeral can act as a gift for your family when you are no longer around. In addition to the grief that they will be experiencing as a result of your passing, your family and friends may stress over the details of planning a funeral. They may be uncertain as to whether or not you would have wanted particular services or may be concerned about your approval. By preplanning services and events, your loved ones will be able to celebrate your life with peace of mind in knowing that your final wishes have been granted.

Preplanning your funeral can mean many things, such as outlining the type of funeral service you want (open casket, memorial, or graveside) or determining whether you want to be buried or cremated. You might consider events, such as having a reception after the funeral, or religious rites that you want recognized. It may also be helpful for you to indicate who you wish to read your eulogy.

If you have any questions with respect to your estate plan, please...

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Writing a Memorandum

estate planning wills Oct 17, 2018

Writing your Memorandum

  • Describe the item in enough detail so that it cannot be confused with another item;
  • Identify the recipient by name and if necessary, relationship so that there can be no confusion;
  • Date and sign the Memorandum;
  • Store the dated, signed Memorandum with your signed Will;
  • Let your Executor know that there is a Memorandum.

Changing Your Memorandum

Edits made on a Memorandum, even if initialed and dated, may be questioned regarding authenticity.  If you wish to make a change to a gift, it is recommended that you print a new template and rewrite the Memorandum.

Ensure that you physically remove old copies of the Memorandum when you store the updated memorandum with your Will.

It is true that “non-binding” means that your Executor can use his or her discretion with respect to adherence to the wishes you stated in your Memorandum, but you should have confidence that your Executor will follow your wishes as closely as possible, using discretion...

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Personalize Your Legacy

estate planning wills Oct 10, 2018

Some of the most meaningful Wills are those that include messages to family members. These Wills provide a message that can be delivered from beyond the grave.

One of my personal favourite Wills was a Will that was written by a wonderful elderly school teacher who had a close group of friends that got together every week for a cup of earl grey tea and fresh biscuits. Over the course of her life she had collected and been given many beautiful tea pots. Upon her death, her Executor had an elaborate tea party for all her family and friends at the Rutherford House. During the tea party, the Executor gave each of the friends a specific bequest that they had been left in the Will. Each friend received a special teapot. This memorable tea party created a meaningful way for the family and friends to celebrate the life of a great teetotaller.

Another one of my favorite Wills involved one of our clients that had a 5 foot, (yes that is feet not inches) potato peeler. It had been a running joke...

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Should I use a DIY Will Kit?

wills Oct 03, 2018

A do-it-yourself (DIY) legal Will kit that is correctly filled out can save you about $500 and take care of your assets after you die – but are these Will kits a good idea?

In order for a form or document, like a Will, to be truly effective and to stand up in court if challenged, it must be filled out and executed (signed) correctly. Most people do not know or understand the legalese on the forms and make guesses, which can invalidate the document; in our experience, most people mishandle the execution page(s).

Two valid witnesses are required to properly execute a Will, and the testator/testatrix (the man/woman creating the Will) and the witnesses must sign the Will in the presence of each other. The witnesses should not be the beneficiaries or the spouse of a testator/testatrix, or the gifts named for that person in the Will become invalidated. Depending on how the Will is structured, initials may be required on every page.

You may have heard of cases where a handwritten...

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Reasons NOT To Use a Will Kit

wills Sep 26, 2018

Often times, Wills don't get the attention they should and frequently end up being little more than an add-on service provided by a lawyer when you purchase a new home, or a 'do it yourself' document.

Here are 4 common mistakes that our office sees quite often:

Leaving too much money to kids too early...

If you and your spouse die simultaneously and you add up all your assets, like the value of your house, life insurance, investments, and pension benefits, your estate may be quite large. You do not want to leave your child half a million dollars when they are 21 years old. Think about staging the ages and amounts that your children will receive.

Not understanding what assets your Will covers...

Many assets, like TFSAs, RRSPs, pensions and insurance policies may have direct beneficiaries. These beneficiary designations will generally trump your Will and these assets may end up being passed outside your estate. This may mean that your children will inherit large amounts money on their...

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The Basics and Process of Probate

Uncategorized Sep 19, 2018

Every human must come to terms with the finite nature of life. One of the greatest hardships in one’s life is losing a loved one. When a family member passes away, there are often loose ends to be tied up. It can be surprising how much tape there is to cut through by the surviving members of the family. 

The paperwork and bureaucratic regulations regarding a personal trauma can feel as though it is adding insult to injury. For this reason, estate litigation and the grant of probate is best handled by a designated executor or administrator as your personal representative.

The customs, laws, and regulations surrounding probate have changed over the years but the goal of the process is still the same. When a loved one leaves the earth with loose ends, the law provides a streamlined process of settling discrepancies. Sometimes, when one passes unexpectedly, debts may be left unresolved and estates may be left without a beneficiary. A will conveys one’s final wishes...

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How long does it take to deal with an estate?

estates Sep 12, 2018

In Alberta, there is a common-law rule of thumb that an executor has one year from the date of death to complete their administration of an estate. This means that they have 365 days to collect in estate assets, pay estate debts and liabilities, and distribute the residue in accordance with the terms of the Will. Sometimes, this rule of thumb is followed and an executor successfully completes all of their duties within one year. Other times, and generally when the estate is more complex, the administration can take far longer. For example, if provisions such as a minor's trust clause or a Henson Trust are included in a Will, the estate may not be closed for many years.

It is unreasonable to demand or expect a full distribution of the estate in less than one year. In addition to their many other responsibilities, the executor must obtain a tax clearance certificate from the Canada Revenue Agency (CRA), which could take up to 18 months or more to obtain. Many times, a portion of the...

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