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The Seven Deadly Sins of Estate Planning
- 1. The Seven Deadly Sins of Estate Planning Douglas Hancock Daigle & Hancock Professional Corporation 51 Village Centre Place Mississauga, Ontario L4Z 1V9 (905)273-3339 www.daiglehancock.com
- 2. The Raymond Soroka Breakfast Series
- 3. GREED “ Having lost all sensitivity, they have given themselves over to sensuality so as to indulge every kind of impurity, with a continual lust for more” (Ephesians 4:19)
- 8. WRATH “ A gentle answer turns away wrath, but a harsh word stirs up anger” (Proverbs 15:1)
- 13. LAZINESS “ The way of the sluggard is blocked with thorns, but the path of the upright is a highway” (Proverbs 15:19)
- 17. ENVY “ Therefore, rid yourselves of all malice and all deceit, hypocrisy, envy, and slander of every kind. Like newborn babies, crave pure spiritual milk, so that by it you may grow up in your salvation.” (1 Peter 2:1-2)
- 22. PRIDE “ Pride goes before destruction, a haughty spirit before a fall” (Proverbs 16:18)
- 25. GLUTTONY “ for drunkards and gluttons become poor, and drowsiness clothes them in rags” (Proverbs 23:21)
- 28. LUST “ But I tell you that anyone who looks at a woman lustfully has already committed adultery with her in his heart” (Matthew 5:28)
- 33. QUESTIONS?
Editor's Notes
- Joint Tenancy – Testators will enter into joint tenancies so as to avoid the probate process related to property.
- INTENT Beneficial owner – argument can be made that transfer to joint tenancy only to avoid probate fees upon death. Pecore v. Pecore : Aging father has joint account with his eldest adult daughter based on accounting advice provided by his financial advisor. The father was the only one to make deposits into the account. At the time of his death, the account had a value of approximately $1 million. He was closest to his eldest daughter and was estranged from one of the other two children. The court held that the presumption of advancement applied and that the evidence showed the father intended to give his eldest daughter beneficial interest when establishing joint ownership. It is the onus of the surviving tenant to prove the transferor intended to gift the right of survivorship. Evidence the court will look at in considering intent of transferor: contemporaneous evidence – best evidence subsequent to transfer – must be relevant bank documents control and use of funds in account – not determinative granting power of attorney – court’s discretion to consider tax treatment of joint accounts – court’s discretion to consider TAX IMPLICATIONS While entering into joint tenancy may avoid probate fees, there is the possibility of creating tax liabilities when entering into a joint tenant relationship with a child.
- Probate fees in Ontario are called Estate Administration Tax
- Part V of the SLRA addresses support for dependant spouse, child – If the deceased did not provide support for dependants, the dependants can apply to for support order from the Estate, even if deceased did not have a Will.
- Boilerplate provision under Family Law Act: “In the event my spouse shall elect under section 6 of the Family Law Act , R.S.O. 1990, c. F-3, as amended or replace, or any similar legislation in other provinces, then they shall be deemed to have predeceased me for the purposes of this Will.” Spouse’s will 6. (1) When a spouse dies leaving a will, the surviving spouse shall elect to take under the will or to receive the entitlement under section 5. R.S.O. 1990, c. F.3, s. 6 (1). Ontario law states that the surviving spouse has the legal right to elect to receive inheritance under the Will, or if left less than 50% of the net family profit, the surviving spouse can apply to the courts within 6 months to receive equalization payment based on the property held by the deceased the day before death.
- Preferential share = $200,000.00 One child – split the remainder of the estate equally btw spouse and child 2+ children – split the remainder of the estate 1/3 to spouse and divide 2/3 btw the children Minor children Custody If joint custody, surviving parent. If custodial parent dies, then fight may break out between new parent (if any), surviving non-custodial parent, or other family members. If no one assumes custody of the child, the province has custody of the child.
- If minor children receive assets directly rather than set up in a trust, then the provincial government will manage according to the rules set out in provincial legislation until the child comes of age.
- The testator can have a declaration in the Will declaring a different Beneficiary for the life insurance policy, but it is best to make sure the policy is updated with the new designation.
- When the estate is divided according to the Will, try to treat the children equally depending on the life circumstances. On an uneven distribution, the children may accept the parents’ reasoning, but on a purely emotional level they view a smaller legacy as less love.
- What if more than one child is interested in the family business? What if only one of the interested children actually has the skills to run the family business?
- Gift = unconditionally transferring ownership and control of your property to another person. Cannot “ungift” a gift
- Before the eye wanders, keep these two points in mind.
- If you name your ex-spouse as executor, the appointment will be cancelled. If there is no alternative executor, then someone will have to apply to the court to be made administrator of your estate. If you named your ex-spouse as beneficiary, the assets will go to the alternative beneficiary. If there is no alternative beneficiary, the assets will go to the residue. If the residue was to go to your ex-spouse and there is no alternative beneficiary for the residue, the residue will be distributed as if you died without a Will.