As of today, according to the Gregorian calendar, we are just over one month away from ringing in the New Year. If you are already contemplating your New Year’s resolution, we thought we would help out in this blog post by providing you with a shortlist of “thinking points” for your estate planning to help you start 2017 with your best foot forward. What follows are five recommendations gathered from our past year’s blog posts to assist in getting your estate plan into even better shape.
1. Take time to complete an annual asset review to ensure your assets are optimally aligned (see “One Key Ingredient for a Successful Estate Plan: Proper Asset Alignment”)
If you haven’t done so recently, consider preparing a summary of your current assets, including current values, how these assets are owned (e.g., solely, jointly with right of survivorship, as tenants in common, through a trust or corporation, etc.) and your beneficiary designations. You can then review this list in conjunction with your current estate planning documents, and consider whether your current asset ownership and the beneficiary designations you have made are aligned with your current wishes and goals and complement your estate plan. Once you have such a list prepared, it can be reviewed annually or more frequently if significant changes occur.
2. Consider the benefits of including trusts in your estate plan (see “Using Trusts: The Future is Bright”)
Despite new income tax rules for some trusts and estates that were ushered in at the beginning of 2016, there remain many significant non-tax reasons for including trusts in your estate plan. While tax minimization is important, estate planning goals also often include protecting children’s or grand-children’s inheritances (e.g., from matrimonial claims; for vulnerable or spendthrift beneficiaries; or for capital succession purposes) where more simple approaches such as outright distributions or transferring ownership to a surviving spouse or children are not sufficient. Trusts can also serve as sophisticated incapacity planning tools, as well as will substitutes to keep assets out of the probate system as much as possible. Some tax-related benefits, such as income splitting, also remain despite the tax rule changes.
3. Consider whether you have connections to other countries (including the U.S.) through citizenship, residency, assets or beneficiaries (see “Canada, the U.S. and Going Borderless: Nowhere to Hide” and “The Two Certainties: Death and (Foreign) Taxes”)
It’s right around this time of year that some of us begin heading off to vacation homes in warmer climates, including the southern U.S. We’ve frequently written on peoples’ increasing global mobility and the planning challenges it presents. With the increasing reporting and sharing of information between Canada and the U.S., as well as the rules regarding certain assets and planning vehicles, it is now more critical than ever to seek professional advice regarding what impact the Canadian and U.S. legal and tax regimes might have on your estate plan and to adjust your plan accordingly.
In addition, having citizenship, owning assets or having beneficiaries who reside in other jurisdictions upon your death may result in unintended consequences for your estate, including double or triple taxation as a result of foreign taxes.
4. If you have minor children, revisit your guardianship planning (see “Considerations in Appointing Guardians of Minor Children under Wills”)
If you have minor children, take a moment to ensure that you have guardianship appointments in place in your will and if you do, consider whether the person(s) named are still appropriate given their current circumstances and your children’s. Also consider whether any additional instructions or wishes should be included in your will to your trustees (e.g., regarding making disbursements to guardians on account of expenses) or in a separate letter of wishes to the chosen guardian(s) (e.g., regarding your child’s upbringing).
5. If you’ve carried out your own probate fee minimization planning by transferring property into joint names with a child, consider the potential implications (see “Owning a Home Jointly with a Child – More Trouble than it’s worth?”)
We recently reviewed some of the concerns relating to real estate that is put into join ownership with an adult child, which may result in more financial and emotional harm than good. While joint ownership could minimize probate fees, this is not necessarily always the case and the attendant potential consequences should be understood.
These are just a few items to ponder as 2017 approaches. As with all estate planning matters, if you have identified a potential issue in your estate plan, seek professional advice and guidance in addressing it.
In our next post, we’ll discuss fiduciary duty in the context of the provision of retail investment advice.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. In particular, they are not intended to provide U.S. legal or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.