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Estate planning calls for tough questions, experienced advice

I'm often asked: what does estate planning mean and how does it apply to me? Proper estate planning ensures that your wishes will be met when you are no longer around. In addition, it allows for the orderly transfer of assets with a focus on reducing the impact of taxation.

Proper planning can dramatically increase the value of an estate. People are often shocked at the taxes owed to the individual governments on final disposition of RRIFs once both spouses are deceased. In addition, capital gains on non-residential real estate and recapture of depreciation on final disposition of these assets can lead to enormous tax exposure for future generations. Clients with large investment portfolios can be subject to huge capital gains liabili­ties once both spouses are deceased. One can easily roll over assets between spouses tax free, however the same rules do not apply to the children. I've seen many estates greatly diminished through poor planning or indifference.

One area of estate planning that requires particular interest is that of second marriages and blended families.

Without proper guidance it is possible that the deceased natural children lose out completely due to assets being transferred to the second spouse, and upon the demise of this second spouse, assets are inherited by the second spouse's own natural children. In this scenario all of the original family's wealth has just been transferred to an entirely different family due to poor planning.

Sometimes the use of Family Trusts are recommen­ded as a way to creditor-proof estates and reduce taxes. There are instances as well where adult children are incapable of managing large sums of money on their own and the proceeds of the estate are governed through a third party who dispenses money accor­ding to the wishes of the deceased for a finite time period. There are many examples of businesses in Canada that have not survived multiple generations due to infighting amongst siblings contesting the desires of their parents or squan­dering fortunes through mismanagement.

There is so much information readily available to address these issues. Do the research. Ask yourself some difficult questions. How will you be perceived by your own children after you are gone?

Seek out the resources of a trusted professional with proper accredi­tation and a good track record. Don't leave things to chance. Make sure your heirs (and not the government) receive the fruits of your lifelong labours.



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