10 BASICS OF SETTLING AN ESTATE

by Kelley Doerksen | Aug 22, 2022 | Estate Planning

Navigating the estate settlement process is often an overwhelming task during an already difficult time. It can be challenging and time consuming, involving much coordination amongst your financial, legal, and tax advisors. Typically there are some common points of confusion or areas that clients have the most questions about.

Here are 10 basics of settling an estate, to help you understand what may be involved.

1. Multiple death certificates are helpful – some institutions require the original, even if it’s just to look at and send back to the executor.

2. Registered and TFSA accounts that have named beneficiaries or successor holders – beneficiaries will receive the proceeds of their entitlement prior to probate being granted in most cases.

3. Non-registered assets, corporate assets, and the sale of the deceased principal residence (amongst other things) will normally require probate granted before assets can be dispersed.

4. Tax must be accounted for at the estate level/deceased person’s level – beneficiaries do not typically pay tax on their inheritance.

• This can pose a problem if a registered investment account is named to beneficiaries who are not spouse or financial dependents of the deceased where a rollover may be used. Normally the full entitlement is sent to the named beneficiary, while tax must still be paid and managed at the estate level. It is important to ensure there will be money available to pay tax.

5. Assets are deemed “disposed” at the deceased’s date of death. Currently, a principal residence is not taxable. Registered investments, if no rollover is available and utilized are considered disposed and will be taxable as income on the deceased’s terminal tax return. Non-registered assets are also deemed disposed, and resulting capital gains or losses will need to be listed in the terminal return.

6. Unused capital losses can be used to reduce ANY income in the year of death, not just capital gains.

7. More than one tax return can be filed for the deceased, including the terminal return, and a “rights or things” return. An accountant can determine if this is necessary or beneficial.

8. Executors normally have a right to compensation and may or may not wish to take this. Finalizing an estate can be substantial work.

9. A clearance certificate should always be requested from CRA once taxes have been paid – in many cases, distributions to residual beneficiaries are best left until this has been issued.

10. Using an estate management system, such as Cadence, can save executors time and ensure nothing is missed when settling an estate.

Your Financial Advisor and other professionals are here to help you through the process. If you have questions about the estate settlement process, please contact us.

You can also find more information about our estate planning services here.

3 CORE ESTATE PLANNING DOCUMENTS

by Kelley Doerksen | Jun 20, 2022 | Estate Planning

Estate planning ensures that if you are physically or mentally incapacitated, your affairs will be managed in a manner that you have prescribed and upon your death, your estate will be distributed according to your instructions.

Here is a brief overview of the three core estate planning documents you may need.

PERSONAL DIRECTIVE

This document addresses personal care issues in the event of incapacity.

It is often referred to as a Living Will.

The agent appointed to act may have the authority to decide where you reside, whom you associate with, the nature of health care, etc.

ENDURING POWER OF ATTORNEY

Whereas your agent under a Personal Directive deals with your being, your agent under an Enduring Power of Attorney is responsible for the care and administration of your assets, often in the event of incapacity.

If the parties acting under a Personal Directive and Enduring Power of Attorney are not the same, they will generally work together in their respective capacities (i.e. decisions concerning where one resides will be influenced by the individual’s financial resources as well as the needs of the donor).

WILL

While the two previous documents deal with the affairs on an individual while they are alive, the Will addresses the testator’s estate at death.

When drafting a Will, one should consider;

• Who will be the executor(s) of your estate? The responsibilities of your executor(s) include, but are not limited to:
• • Following the terms of the Will.
  • Determining the assets and liabilities of your estate.
  • Establishing trusts, if applicable.
  • Gathering of assets.
  • Managing the estate and trust assets.
  • Maximizing the value of the estate.
  • Preparation of multiple tax returns.
• Who will benefit from your estate? Family, charities, etc.?
• When will the beneficiaries receive their share of the estate?
• Who will be the guardian of your minor children?
• Who will benefit from your estate in the event of a family tragedy?
• What powers are you willing to grant your executor(s) so they can effectively manage your estate?

Please reach out to us if you have questions about the estate planning process. We are here to help identify your estate planning needs, and to develop a strategy and plan to meet those needs. We will also coordinate with your lawyer and accountant to ensure your plan is implemented.

NOTE: THIS SUMMARY IS NOT INTENDED TO PROVIDE LEGAL ADVICE. CONSULT A SOLICITOR WHEN DRAFTING A PERSONAL DIRECTIVE, ENDURING POWER OF ATTORNEY, AND WILL.