Estate planning – gifting money

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tnl
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Estate planning – gifting money

Post by tnl »

Hi,
1.After a person has passed away, and lf you are the executor of an estate, can you give as gifts money from the estate to some of the beneficiaries rather than the money going through the will and be probated. For example, if there is a bank account as part of the estate can the executor take 20k from the bank account and give it to a beneficiary that was going to be left the money in the will. Then the estate or the person that was gifted it won’t have to pay probate taxes on it?

2.If a person, before they pass away, distributes some of their money as gifts to their kids rather than leave it for the estate, the person receiving the gift does not pay tax on it?

thanks
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kcowan
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Re: Estate planning – gifting money

Post by kcowan »

1 No
2 Yes
For the fun of it...Keith
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Zipper
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Re: Estate planning – gifting money

Post by Zipper »

Being an executor is serious business and you were chosen to complete a task.

You obviously don't know what you are doing. You may need professional help.
twa2w
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Re: Estate planning – gifting money

Post by twa2w »

1. The bank would not release the money from the account without probate anyway. If the account was joint with the executor with right of survivorship, then the executor could do as described by you but you would want to document it and ensure the beneficiaries sign a release - as you should anyway for all beneficiaries - perhaps not exactly ethical as you are to report all amounts in the estate for probate purposes in most provinces - if the estate got audited and it was uncovered - the executor would be responsible for the extra probate fees and any penalties - out of his own pocket.
Insurance and some other amounts are exempt from reporting on probate. This will depend on what province you are in as probate is provincial.
2. There is no tax on gifts in Canada, nor is there any tax on inherited amounts. The estate would pay any probate fees and income taxes prior to distribution of the estate. There could potentially be capital gains or other income taxes (from RSP or RIFs) that the estate would be responsible for.

Hope this helps
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Re: Estate planning – gifting money

Post by twa2w »

further to Zippers response, most trust companies offer an agent for executor service where they will complete certain duties or help you with certain duties in completing an estate - for a fee of course. They are not lawyers and won't do the actual legal work but they can help with tax efficiency, collecting assets, administering assets, valuations, securing and looking after real estate etc etc.
j831robert
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Re: Estate planning – gifting money

Post by j831robert »

Well, I'm way off base yet again. Just passed a $10K cheque to daughter-in-law with instructions that she open a TFSA account with it in her name (she doesn't currently have one). The proviso is that the money, to be invested in a HISA, is meant to fund my wake in Las Vegas with der kinder's travel and accommodations covered, with any capital gains (left over) hers to do with as she pleases. Takes the cash out of reach of my estate, and der kinder understand my conditions (as we've taken them all there for family gatherings in the past. The 'what if's' don't bother me one bit.
sydney2
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Re: Estate planning – gifting money

Post by sydney2 »

j831robert....in my opinion you are not off base. I love your posts and your philosophy re a whole lot of things. Merry Christmas.
Thorn
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Re: Estate planning – gifting money

Post by Thorn »

Intergenerational joint accounts (e.g. parent and child) Please don't forget that there have been two Supreme Court decisions in the past five years instructing that balances in the accounts must be included in the estate accounting unless the parent has specified in writing (prior to death of course) that the joint person(s) are to receive all the monies in the account(s).

In some ways, it is better to stick with a power of attorney, so the waters don't get muddy.
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Insomniac
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Re: Estate planning – gifting money

Post by Insomniac »

Thorn wrote:Intergenerational joint accounts (e.g. parent and child) Please don't forget that there have been two Supreme Court decisions in the past five years instructing that balances in the accounts must be included in the estate accounting unless the parent has specified in writing (prior to death of course) that the joint person(s) are to receive all the monies in the account(s).

In some ways, it is better to stick with a power of attorney, so the waters don't get muddy.
I haven't heard about this. I thought that a JTWROS account meant that the survivor gets the balance. The parent needs to put it in writing twice? Does this apply to all provinces?
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Arby
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Re: Estate planning – gifting money

Post by Arby »

Insomniac wrote:
Thorn wrote:Intergenerational joint accounts (e.g. parent and child) Please don't forget that there have been two Supreme Court decisions in the past five years instructing that balances in the accounts must be included in the estate accounting unless the parent has specified in writing (prior to death of course) that the joint person(s) are to receive all the monies in the account(s).

In some ways, it is better to stick with a power of attorney, so the waters don't get muddy.
I haven't heard about this. I thought that a JTWROS account meant that the survivor gets the balance. The parent needs to put it in writing twice? Does this apply to all provinces?
This article provides some info. Following is an excerpt.
...In the past, the presumption was usually that the joint account was destined to be a gift. Now, however, thanks to two recent court cases, assets held jointly by a parent and an adult child no longer automatically fall into the child's hands when the parent dies.

In fact, the onus is now clearly on the adult child to prove his or her entitlement, particularly if other family members see things otherwise. If anything, it's now presumed that the money goes into the estate unless there is substantive evidence to the contrary.

"The courts are now taking the view that when an adult child holds an asset jointly with Mom and Dad, there needs to be some proof beyond the mere ownership to show that the child was supposed to receive the asset as a gift after the parent's death," explains Jean Blacklock, author of The 50 Biggest Estate Planning Mistakes.

...
The best way to avoid situations like these is to provide the needed evidence, namely a written record of your wishes. Make sure any banking documents are clear and kept alongside your will, for instance.

If you want the survivor to have all the money in the joint account, write it down and keep the note with your will. If you don't want the money to go to that adult child, then say so in writing.

Better still, prepare a statement of intention with a lawyer and send a copy to the child, as well as any concerned siblings. This record of your intention can apply to other kinds of jointly registered assets, such as houses and cottages, as well.
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Insomniac
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Re: Estate planning – gifting money

Post by Insomniac »

Thanks, Arby.

I knew about the 2007 cases. From Thorn's comment, I was concerned that there might have been something more recent that might have changed things.
BRIAN5000
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Re: Estate planning – gifting money

Post by BRIAN5000 »

Now, however, thanks to two recent court cases, assets held jointly by a parent and an adult child no longer automatically fall into the child's hands when the parent dies.
What about a creditor charge against the joint person while the parent is alive?
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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ghariton
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Re: Estate planning – gifting money

Post by ghariton »

In fact, if you have a joint account with a child, it is wise to specify in your will exactly what is supposed to happen to the joint account upon your death. (My will so specifies.)

George
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