It is a common misconception that only the wealthy need to be concerned with estate planning. When properly structured, an estate plan can reduce the taxes paid on your estate, simplify and speed up the transition of assets to the next generation, and ensure that your beneficiaries are protected.
As a result of an estate planning session, you will have a clear idea of the action plan that you need to follow in order to achieve your-planning objectives. A significant number of potential issues can be easily resolved through properly prepared documents such as a Will, Power of Attorney, Representation Agreement, and Living Will.
Other potential elements of your action plan may include changes in the legal ownership of assets, for example the use of Joint Tenancy agreements. Joint Tenancy ownership allows two or more people to own an asset together. Please note that the word Tenants does not have anything in common with rental tenants. All persons listed as joint tenants share ownership and control of the asset, and upon the death of one of the “tenants”, the ownership automatically passes to the surviving party. By passing directly to the survivor, the asset does not form part of the estate and thus is not subject to provincial probate taxes.
The alternative to Joint tenancy is Tenancy-in-Common. This is the ownership of an asset by two or more individuals together, but without the right of survivorship that is found in a Joint Tenancy. Unlike in Joint Tenancy, the assets held under in Tenancy-In-Common are subject to probate taxes because the assets would have passed through the estate of the deceased tenant.
The other option may be the gifting of assets prior to death. Before a gift is made, you should ensure that by making the gift you do not jeopardize your own lifestyle. This is best evaluated within a comprehensive financial plan.