fbpx

Articles by: Marci Perreault

Author: Marci Perreault

Are you a Canadian resident with U.S. property?

Thinking of purchasing property in the U.S.?

Here’s a topic that often comes up in estate planning and financial services. Owning property in the U.S. is something we discuss at a high level with our clients, particularly when planning their estate. We always refer them to a U.S. accountant for further guidance and detailed advice.

There are many intricacies involved in owning property in the U.S., so it’s a best practice to consult a U.S. accountant—whether you’re considering the purchase or reviewing the details after acquiring property.

Are you a Canadian resident with U.S. property?
Author:  Valerie Markidis
Wealth Planning Consultant with Cl Assante Private Client’s Wealth Planning Group

With the weather cooling and winter on the horizon, snowbirds are poised to fly south-but if you’re looking to purchase a property in the U.S. or returning to one you already own, you may face estate planning complexities.

On death, Canadian residents’ estates may owe income taxes in Canada, since there’s a deemed disposition of all assets owned personally. The resulting capital gains on property, including U.S. property, will be taxed at the appropriate inclusion rate based on the Canadian value of those capital gains.

The estate may also owe income taxes to the U.S. Internal Revenue Service, though a tax credit may reduce the impact of double taxation.

In addition to U.S. and Canadian income tax, there is also U.S. estate tax to consider. U.S.
estate tax is calculated differently based on whether or not the deceased is a U.S. citizen; for this discussion, we will assume the person who died was not a U.S. citizen.

U.S. estate tax may apply if, at death, the deceased:

  1. Owned U.S. situs assets (including U.S. real estate) with a value greater than US$60,000, and
  2. Had a total value of worldwide assets greater than the U.S. exemption for the year of death

The current per-individual U.S. exemption rate is quite high, at US$13,610,000 in 2024 and rising to US$13,990,000 in 2025. However, it is scheduled to reduce to approximately
US$7,000,000 in 2026 unless there are legislative changes.

Professional advice is essential
If you’re planning to purchase a property in the U.S., consult with legal and tax professionals specializing in cross-border estate planning to ensure the proper ownership structure. For instance, you may decide to own the property jointly with your spouse or other individuals, with rights of survivorship, or you may choose to own the property indirectly, such as through a trust or partnership. Each type of ownership has its own implications, and the right one for you depends on your specific situation.

In addition, if you expect to own a U.S. property on your death and will be exposed to U.S.
estate tax, proper estate planning is important. Strategies that may be beneficial include: 

  • Using life insurance 
  • Gifting assets during your lifetime 
  • Using a non-recourse mortgage to reduce the value of the U.S property 
  • Donating the property to charity on death

To simplify handling your estate after your death, it may be wise to have a separate will for your U.S. property. While your Canadian will can cover your U.S. assets, this often creates administrative challenges, leading to delays and additional costs in settling your estate.

Summary
If you own or plan to own a U.S. property, seek legal and tax advice from an advisor specializing in cross-border estate planning to ensure your wishes on death are realized in the most tax-effective manner.

in Financial Freedom Posted by Marci Perreault

Popular Canadian Tax Credits and Deductions (2024)

While tax season isn’t until the end of the year, there are some benefits to planning ahead so you have a clearer idea if you will receive a bill or a refund. One of the best ways to plan ahead is to be aware of the tax deductions and credits you may qualify for.

We’ve rounded up some popular options for 2024 to help investors try to maximize their tax savings.

Tax deductions vs. tax credits

So what’s the difference between a tax deduction and a tax credit, anyway? Both can help lower the amount of tax you might have to pay, but they go about it differently.

Deductions work to lower your taxable income, so less of your earnings are subject to tax in the first place, potentially dropping you into a lower tax bracket.

Tax credits, by comparison, reduce the amount of tax you pay, potentially lowering your tax bill. There are two types of tax credits: refundable and non-refundable. Refundable credits are paid out even if you don’t owe any income tax. Non refundable tax credits, however, can only be used to offset income tax you owe. While non-refundable tax credits can reduce your tax bill to zero, they won’t qualify you for a tax refund.

Popular tax deductions in Canada

Registered Retirement Savings Plan (RRSP) contributions

RRSP contributions are arguably the best-known tax deduction. They are so popular that a whole event has been built around the filing deadline. But it’s important to remember there’s a limit on how much you can contribute each year. For 2024, the contribution limit is $31,560, or 18% of your income earned the previous year, whichever is less. That said, unused contribution room carries over, so you may be able to contribute more if you haven’t maxed out your available contribution room from the previous year. Although you can make contributions at any time, the deadline to be able to apply those tax credits to your previous year’s earnings is typically 60 days after the end of the calendar year.

First Home Savings Account (FHSA)

Launched in 2023, the FHSA is a registered account that allows first-time homebuyers to save money that can be put toward building or buying a house. The contribution room grows by $8,000 per year, with a lifetime contribution limit of $40,000. Remember, you don’t start earning contribution room until a FHSA account is opened. These contributions work a little like RRSPs, by lowering your taxable income, and unused contribution room also carries over to the next year. Still, there is one notable difference: unlike the RRSP contribution deadline, the filing deadline for FHSA contributions is the end of the calendar
year.

Investment expenses

Did you borrow money to buy investments inside a taxable account (meaning outside an RRSP or TFSA)? If so, the interest you paid on those loans can be deducted from your taxable income – as long as it’s used to try to earn investment income such as dividends or interest. There’s a caveat: if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. Also keep in mind that there are special rules in Quebec.

Home office expenses

If you work from home, there are certain expenses you can deduct, such as your home internet and a portion of your utilities. In 2023, Ottawa eliminated the simplified method of calculating expenses in favour of the detailed method, which requires you to list specific expenses and amounts. Your employer will have to fill out a form, too.

Notable tax credits

There are dozens of potential tax credits that can help you reduce your taxes, like those related to moving expenses or child care. Here are just a few of the more common ones to highlight their potential.

First-Time Home Buyers’ Tax Credit (HBTC)

If you bought your first home in 2024, you could receive up to $1,500 through this non-refundable credit.

Multigenerational Home Renovation Tax Credit (MHRTC)

If you renovated your home to build a secondary unit to house someone over the age of 65 or an individual between 18 and 64 with a disability who is eligible for the disability tax credit, you could receive this refundable tax credit. Those who qualify can claim up to 15% on certain costs of up to $50,000.

Digital News Subscription Tax Credit

If you’re a big consumer of news, this one’s for you. Anyone who pays for a subscription to a qualifying news organization after 2019 and before 2025 can claim this non-refundable tax credit of up to $500.

Canada Training Credit

If you’re between 26 and 65 and spent money on training fees this year, you may qualify for this refundable tax credit. To claim this credit, your working income must be more than $10,100, and your individual net income can’t exceed $150,473. The credit accumulates at a rate of $250 per year, up to a lifetime limit of $5,000.

Federal Political Contribution Tax Credit

Did you or your spouse contribute to a registered federal political party or association this year? You could claim up to $650 through this non-refundable credit (except in Ontario).

Medical Expense Tax Credit (METC)

If you paid for any medical expenses this year, you may want to hold onto your receipts. You can claim some of them (there are more than 100 that qualify) on your tax return with this non-refundable tax credit. Examples include ambulance service, prescription drugs, cancer treatment and hearing aids.

in Financial Freedom Posted by Marci Perreault

Five Items Often Overlooked in a Will

Updating your Will from time to time is important, especially as the world becomes more and more digital. This month Marci looks at some of the components that should be included when it comes to your estate planning and Will.

Five Items Often Overlooked in a Will

Written By: Marci Perreault
KenMar Financial Services

Loyalty programs

Each loyalty program has its own rules about whether points can be transferred to a beneficiary, so check your programs’ policies. When allowed, list the loyalty program in your will and name the beneficiary of the points. Also, provide your executor with each loyalty program’s login information.

Digital assets

In your will, you can grant access, provide instructions, or name beneficiaries for a range of online accounts and property. Such items may include bank and investment accounts, automatic bill payments and subscriptions, personal or business websites, photo or video collections, social media accounts, or a cryptocurrency wallet.

Pet care

If you have a friend or family member who will take care of your pet, you can name them in your will to become the pet’s new owner. Also, in the will, you can leave this person funds to cover pet insurance, food, and other costs.

An RESP

Are you the sole subscriber of a Registered Education Savings Plan (RESP)? On your passing, the default is that the grant money is repaid to the government and the remaining assets become part of your estate. A solution is to name a successor subscriber in your will. The successor subscriber can maintain the RESP for your child or grandchild.

Special possessions

Some possessions get left out of a will because their value is primarily sentimental, not financial. However, many items—even a fishing rod or a pasta maker—could remind your child of a special bond you shared.

in Financial Freedom Posted by Marci Perreault

Best Practices When it Comes to Monitoring Your Credit Card and Online Financial Transactions

In today’s digital age, the convenience of electronic transactions has become an integral part of our daily lives. However, along with this convenience comes the risk of encountering false charges that can unexpectedly drain our finances.

Recently, a resident of British Columbia found himself in an alarming predicament when he discovered he had been unknowingly footing the bill for someone else’s cell phone expenses for a staggering five years. This unfortunate incident underscores the importance of vigilant monitoring of our financial transactions to prevent such occurrences from slipping through the cracks.

How false charges occur

False charges can arise in numerous ways. For example, the bank or credit card company may make an error. You may sign up for a one-month trial subscription that automatically renews every month. A store may inadvertently charge you twice or fail to process a return. Or perhaps you’re a victim of fraud. Scamming methods include phishing emails and phone calls, accessing data over public Wi-Fi, acquiring names and card numbers through a company data breach, and scanning a card’s magnetic stripe with a skimming device.

Monitoring transactions

Unless you make it a habit, it’s easy to let up on checking your purchases. You should monitor your bank account transactions and credit card statements at least monthly.

That includes statements for a credit card you only keep for emergencies. Some people prefer to check weekly if it’s onerous going through 30 days of transactions.

Note that sometimes a merchant’s name shows up that you don’t recognize because it’s the name of the merchant’s parent company. You can verify the associated purchase if you keep receipts, record transactions or use an app that tracks purchases. If you don’t have your receipts, generally, a call to your issuing credit card company will assist in finding this out.

An additional way to monitor transactions is to sign up for alerts, which can help identify fraud. Some financial institutions offer an extra layer of protection through transaction alerts, enabling consumers to receive real-time notifications of any activity on their accounts. Whether through text messages, emails, or dedicated mobile applications, these alerts serve as a proactive measure against potential fraud when a credit card or debit card transaction is made on your account. They empower individuals to take swift action in the event of unauthorized transactions.

One more detail to think about: if you or your parent or loved one begins to double pay bills or make purchases you can’t recall making frequently, it may be time to register a family member’s email and phone for texts so you may have a second pair of eyes looking out for fraud schemes, and monitoring monthly transactions.

In essence, the proactive monitoring of financial transactions serves as a crucial safeguard against the perils of false charges and fraudulent activity. By remaining vigilant and implementing sound practices, individuals can mitigate the risk of financial loss and safeguard their hard-earned assets in an increasingly interconnected digital landscape.

in Financial Freedom Posted by Marci Perreault

When You Retire, Financial Literacy Expands

Retiring from the workforce as you know it requires a great deal of planning and a disciplined approach to saving, decades before you retire completely.

Just as your needs change over time, wealth planning now changes. It may include shifting into lower-risk portfolios while ensuring the best possible return on your investments.

Articulating your goals clearly will help define where your financial advisor invests or places your funds to work for you.

A good financial planner will ask relevant questions and provide insight into which information sources are best to further your knowledge and understanding.

This September, Marci Perreault, a certified financial planner and partner at KenMar Financial Services, offers some areas to consider as you manage your retirement savings for many years to come.

When You Retire, Financial Literacy Expands 

By: Marci Perreault

Wealth planning doesn’t retire when you do – it just changes. Now, financial life is largely about making the most of the wealth you’ve accumulated. You’ll be learning about new rules, products, and strategies that involve a broad range of financial considerations.

Fortunately, your expanding financial literacy doesn’t have to happen all at once. You can acquire new knowledge gradually as needs arise.

From Accumulation to Decumulation

When you have retirement savings in your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF), Tax-Free Savings Account (TFSA), and non-registered account, how do you know which source to tap first for income? You’ll learn that there’s no formula to follow. It depends on each retiree’s particular tax situation, government benefits strategy, and estate planning goals. We’ll work with you to develop a plan that suits your circumstances. This may be a balancing act in which you draw varying amounts from multiple sources.

Along the way, you’ll also learn about splitting pension income, making RRIF withdrawals strategically, and ensuring you don’t outlive your savings.

Planning Your Estate

Although estate planning typically begins in your working years, new factors often arise during retirement.

  • Controlling an Inheritance: If you have reason to control how an heir receives their inheritance, you’ll want to know about trusts. Situations include being in a second marriage and wanting to leave an inheritance to children from your first marriage, having minor beneficiaries, and preferring that an heir receives funds over time instead of in a lump sum.

  • Covering Tax: You’ll learn about ways to minimize the tax on your estate’s assets, such as gifting certain assets now to limit their appreciation or transferring assets to your spouse upon your passing. Also, you’ll develop a plan to cover the tax liability that is ultimately payable by your estate.

  • Using Life Insurance: One way to offset the tax on estate assets is through a permanent life insurance policy. Life insurance can also help equalize inheritances—for example, when one child takes over the family business and the other child receives insurance proceeds. With life insurance, the financial need is taken care of as soon as you pay the first premium, and proceeds are received tax-free, but the cost of the premiums must be weighed against other funding solutions.

Repurposing Your TFSA

In retirement, your TFSA could become a tax-free environment for any funds from your minimum required RRIF withdrawals that you don’t require as retirement income. Also, you can take advantage of the tax-free nature of TFSA withdrawals in several ways, such as minimizing any clawback of Old Age Security (OAS) benefits or preventing your income level from being pushed into the next tax bracket. You’ll also find out about different ways TFSA assets can be used in estate planning, either to help manage taxes on your estate’s assets or to leave as an inheritance.

Investment Changes

When you’ve been investing for decades, there’s not a lot that’s left to learn. However, you may be introduced to several products and strategies designed for the retirement years. For example, you can choose new non-registered investment funds that provide tax-efficient monthly income. To safeguard against withdrawing funds when the market is down, some retirees draw their income from a cash reserve that they replenish periodically.

We’re Here to Help You

Wealth planning in this new chapter of your life involves many decisions you haven’t faced before. However, with our help, you’ll find that your financial life during retirement goes smoothly.

Stay informed. We’ll educate you on each new topic so you feel comfortable, not intimidated.

Explore options. When a wealth planning matter arises, we’ll outline the available options. For example, say that a retiree wants to give financial support to grandchildren of varying ages. The first choice is whether to give funds now, leave an inheritance, or both. If it’s now, will the funds be for education costs, a down payment on a home, or any future use? If it’s an inheritance, will grandchildren be named in the will or designated as beneficiaries of a life insurance policy or a registered plan?

Be well-advised. If a decision is simply based on personal preference, we’ll let you know. When a solution depends on your unique financial situation and goals, you can trust us to recommend the product or strategy that best meets your needs.

in Financial Freedom Posted by Marci Perreault

Have You Named a Trusted Contact Person?

If you are not prepared to decide on a Power of Attorney for your investments, assigning a trusted contact for your investments may be a good option.

This month Marci Perreault, Certified Financial Planner,  gives some context as to why this may make sense.

As always, Marci is available for consultation.

Enjoy your summer days!

Have you named a trusted contact person?

The Canadian Securities Administrators, an umbrella organization of provincial and territorial securities regulators, introduced a measure two years ago to help protect investors’ financial interests. Investors could give their advisor the name of a “trusted contact person.” 

Meeting a need 

An advisor can contact this individual if the advisor believes the investor may be losing their ability to make sound financial decisions or could be vulnerable to financial exploitation or fraud. 

Much of the need for a trusted contact person is to protect investors at older ages when they may develop dementia or another cognitive impairment, but investors may also benefit from this help at a younger age. For example, someone who suffers a serious illness could be taken advantage of by a caregiver. 

An advisor’s unique position 

A wealth advisor may notice changes in an investor’s behaviour or signs of exploitation that could jeopardize their assets. Perhaps an investor is becoming confused about financial concepts they had understood before, or they’ve been making large, unexplained withdrawals. 

An advisor could reach out to the trusted contact person to discuss their concerns. The contact person might offer helpful information to the advisor, have a discussion with the investor or take other steps to address the situation. 

If you haven’t yet named a trusted contact person, consider naming a family member or close friend. Keep in mind, the Canadian Securities Administrators recommends that you choose a different person than your power of attorney or mandate representative, to provide an additional level of security.

in Financial Freedom Posted by Marci Perreault

Spring Clean Your Beneficiary Choices

Keeping your beneficiaries list up to date and current is important for many reasons.

This month KenMar Partner Marci Perreault shares some reasoning as to why this is an important step in planning and updating your Will if your circumstances change.

If you need any guidance or further explanation, please give Marci a call.

Marci Perreault, FLMI, CHS, CFP
Certified Financial Planner
KenMar Financial Services
Assante Financial Management Ltd.
Suite 300,  68 Chamberlain Ave
Ottawa ON  K1S 1V9
Phone 613-231-7700 EXT 223
FAX 613-231-7744

Mutual Funds provided through Assante Financial Management Ltd.

Spring Clean Your Beneficiary Choices

Say that the holder of a Registered Retirement Savings Plan (RRSP) names their spouse as the beneficiary. Later, the couple divorces. The RRSP holder removes their ex-spouse from their will. However, with all the activity surrounding the divorce, they neglect to change the RRSP beneficiary designation from their ex-spouse to their child.

If the RRSP holder passes away before converting the plan to a Registered Retirement Income Fund (RRIF), the RRSP assets could go to the ex-spouse. It gets worse. The tax liability on the RRSP assets, equal to about half their value, must be paid by the estate, leaving even less for the child.

This scenario shows the need to ensure your beneficiary designations are all up to date.

Keep a beneficiary record

To begin, it’s helpful to keep an online or paper record of beneficiaries that you specified in your will and designated for all relevant financial vehicles. These may include an RRSP, RRIF, Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), life insurance policy or segregated fund.

Note that for registered plans, the beneficiary can be designated on the registered plan documentation in provinces other than Quebec. Residents of Quebec name their legatee (beneficiary) for each registered account in their will, not on the account form—with one exception. A legatee can be named on the form when the investment is an eligible insurance product, such as a segregated fund.

When to make a change

The most common reason to add or change a beneficiary is when you or someone in your family has a significant change in their life. Events or situations could be marriage, divorce, birth or adoption of a child, or the passing of a loved one. For example, someone remarries and names their new spouse as the beneficiary of their RRSP. Or an individual has a new grandchild and updates their will to add the grandchild as a beneficiary, also establishing a trust. Ideally, you update your beneficiary designations when the event arises. However, reviewing your choices from time to time allows you to catch any changes you may have overlooked.

Also, changes in your or a beneficiary’s financial situation or updates to your estate plan can call for a beneficiary review. Maybe a parent designated both children as beneficiaries of a vacation property, but recently one child moved out of the province—so there’s a decision to make. Or perhaps a retiree has a permanent life insurance policy no longer needed to protect the family, so they change the beneficiary from their spouse to a charity.

Changes to beneficiaries may be needed for a variety of reasons, including ones that are unique to your situation. Be sure to keep a record of your beneficiaries, and don’t wait too long before conducting a review.

in Financial Freedom Posted by Marci Perreault

Control The Inheritance You Leave To Your Heirs

This month, Marci Perreault, partner, KenMar Financial Services introduces us to a few reasons why establishing a trust could work for you. It’s enlightening and a quick snapshot into a few options available to you.

As always, it is important to discuss any questions you may have with your financial advisor.

Control The Inheritance You Leave To Your Heirs

If you were to imagine someone establishing a trust, you may picture an individual leaving their hilltop mansion and being driven by their chauffeur to stately law offices visited only by the rich and famous. In reality, a trust can be used by just about anyone to meet a variety of estate planning needs. One of the most common uses is controlling how an heir or heirs will receive their inheritance.

Trust basics
The person who establishes the trust is the settlor. The settlor appoints someone to manage the trust, called the trustee. This could be a friend, family member, professional or trust company. The beneficiary is the person who will ultimately receive income or capital according to the terms of the trust.

There are two basic types of trusts. An inter vivos trust, or living trust, takes effect during the settlor’s lifetime. A testamentary trust comes into effect upon the settlor’s passing. The following applications all use a testamentary trust.

Beneficiaries lacking financial expertise
It’s an uneasy feeling to leave a large lump sum of hard-earned money in a will to someone you suspect will spend it quickly and unwisely. A trust allows you to give explicit instructions to the trustee to control the inheritance, including the distribution amounts and frequency. A beneficiary may be trustworthy but require guidance in managing investments. By choosing a trustee with investment acumen, you can feel comfortable knowing the inheritance will be properly managed to meet income and growth needs.

Parent in a second marriage

If someone is in a second marriage and has children from their first marriage, estate planning can be a little different. Say the individual wants to provide for their current spouse but also wishes to leave an inheritance for the children from their first marriage. Several solutions are available, and one uses a spousal trust. The spouse would receive income from the trust, and possibly some capital, during their lifetime. When the spouse passes away, the trust assets would go to the children.

Caring for a child with special needs

 Establishing a trust for a minor or adult child with special needs can help you be confident they’ll always be cared for in the best manner. A tax professional can advise you on how a trust can be set up without affecting government benefits.

A trust for minors

If you have beneficiaries who haven’t reached the age of majority, you can direct their inheritance to a trust. The trustee can manage the funds until each beneficiary reaches the age that you determine. At that point, a beneficiary can either receive a lump sum or periodic distributions according to the terms you establish.

Fulfill your personal preference

Trusts can be flexible. The terms and conditions you put in a trust are almost limitless and may primarily reflect your personal wishes. For example, a beneficiary may be financially reliable, but you might have their inheritance distributed periodically because you don’t want to chance a lump sum inheritance disrupting their work ethic. Or perhaps a settlor will make college or university graduation a condition of receiving their inheritance. A trust gives you the ability to help ensure the inheritance enhances a beneficiary’s life, rather than drastically changing it.

If you would like more information about trusts, contact us or talk with your lawyer or tax professional.

in Financial Freedom Posted by Marci Perreault

Should You Delay Drawing Your Old Age Security?

One thing we know for sure, people are retiring in numbers Stats Canada would liken to the original Baby Boom.

The number of Canadians who retired jumped almost 50 percent in the last year, according to recent data from Statistics Canada.
“The youngest baby boomers are the biggest demographic cohort, and they’re starting to get to retirement age,” said Pedro Antunes, chief economist at the Conference Board of Canada.

In August, Statistics Canada released data showing a record-high 307,000 Canadians had retired over the previous 12 months, up from 233,000 a year earlier. That flood could well continue: Statistics Canada also reported that, in August, 11.9 cents of permanent employees were planning to leave their jobs within the next 12 months, 5.5 percentage points higher than in January.

Whether it’s age or Covid related angst or we are done with the day-to-day stress of work life when we draw our “Old Age Security,” it is something we should take into consideration. And by the way, is it just me, or do you take offense to “ Old Age Security”? My, have times changed.
-Natalie

Should you delay your OAS pension?

Last summer, Old Age Security (OAS) benefits permanently increased for the first time in almost 50 years. The payment increase is 10% and applies to seniors aged 75 and older.

This increase gets a further boost when seniors delay starting their OAS benefits. Monthly payments increase by 0.6% for each month you delay payments beyond the traditional age 65 start date. That’s a 7.2% increase for a one-year delay and a 36% increase for the maximum five-year delay at age 70.

Reasons to delay OAS payments

If you work beyond age 65, it often makes sense to delay OAS payments since you likely don’t need the pension income.

If you have retired by 65, the main reason to delay OAS payments is simply to gain additional financial security at older ages. You’ll receive a higher monthly benefit that’s indexed to inflation and guaranteed for life.

Why start at age 65?

Anyone who needs OAS benefits at age 65 to help support their retirement has an easy decision to begin when eligible.

Even if the income isn’t needed, there are several reasons to start at 65. It means drawing down less from retirement savings, which may leave more assets as an inheritance. Beginning payments at 65 ensures money isn’t left on the table if a retiree doesn’t live long enough to benefit from increased payments at older ages. In addition, retirees who expect their mandatory Registered Retirement Income Fund (RRIF) withdrawals to result in a clawback of OAS benefits at age 71 may want to start receiving OAS payments at 65.

in Financial Freedom Posted by Marci Perreault

Ensure Family Harmony When Planning Your Estate

When you leave an inheritance to your loved ones, you intend to give each person some welcome help in meeting their financial and life goals. No one wants an inheritance to cause discord among the beneficiaries. Unfortunately, that can happen in certain situations if plans aren’t shared with beneficiaries in advance. 

By communicating your plans, you can find out if each person is comfortable with what you have in mind. If you discover that someone feels they’re not being treated fairly, or that your plans might strain the beneficiaries’ relationships, you can make changes to remedy the situation. 

Generally, three types of situations may lead to inheritance troubles:

  • When siblings’ inheritances of cash or financial investments are intended to be fair but are not equal 
  • When a property is being shared 
  • When one beneficiary receives an indivisible asset

Fair versus equal 
Some parents face a situation where they question if it’s fair to divide an inheritance equally. If one child is a well-paid chief executive officer and the other faces health issues and has often been unemployed, do they receive the same inheritance? If parents gifted one child the down payment on a home, is that amount deducted from their share? If one child left their job to care for their aging parent, does that child receive a larger inheritance? When a parent wants to give inheritances that aren’t equal, it’s best to have a discussion with children to make sure they accept the plan. 

Sharing a property
Siblings may have different ideas on what to do with an inherited property. Say that a parent handed down a vacation property that had been in the family for generations to their three children. Two of the children want to keep the property, but one wants to sell it and use the proceeds to fund their children’s education. Situations like this do arise and can lead to bitterness between siblings. If you find out in advance about your children’s wishes, you can work with your advisor to develop a solution that is acceptable to all. 

When an asset won’t be shared 
What happens when only one child will be taking over the family farm or small business, or inheriting the vacation property? You need to find a way to compensate the other child or children. If there won’t be enough cash or other assets available to equalize the inheritance, you could consider naming the other children as beneficiaries of a permanent life insurance policy on your life. Whatever solution you choose, it’s important that all children agree it’s fair to everyone.

in Financial Freedom Posted by Marci Perreault

ARE YOU INTERESTED

In living At The Wellings?

Call us Today

A New Concept in 55+ Community Living

You’re too young to live in a retirement home, so why consider it? Discover Carefreedom Living® in a community lifestyle, with larger apartments, fully-equipped kitchens, a full range of amenities to choose from. The Wellings concept promotes complete independence, lots of amenity choices, and modern conveniences you will appreciate.

CONTACT OUR TEAM

Natalie Tommy

Chief Marketing Officer

FREDDI RODIER

Community Builder

1-866-449-9693

LIFE@MYWELLINGS.COM

Address

MAIN OFFICE:

555 Legget Drive, Tower A, Suite 920,
Kanata, ON K2K 3B8

© 2023 – Wellings. All rights reserved. Terms of use and Privacy Policy