August 2015 - Garton & Harris

Wills and estates in British Columbia

August 28, 2015/in Wills/by gartonandharris

For most British Columbia estate plans, the will is the most important estate planning document. Your will allows you to express what you want to happen with your estate in the event of your incapacitation and/or death. Wills provide important direction as to who shall be named the guardian of your children. They say who shall serve as executor of your estate after you have died. They also can be used to provide clear information about how you wish your affairs to be handled if you have become too mentally ill or physically incapacitated to make decisions for yourself.

At Garton & Harris, we help our British Columbia clients draft watertight wills that limit the dangers associated with them being challenged — for example, in the event that an excluded family member feels that he or she has been treated unfairly. We can even help clients draft their wills in a way that will prevent the likelihood of family disagreements, so that all family members feel fairly treated, relating to the dispensation of your estate.

It important to keep in mind while drafting a will that the document will not cover every type of assets. In fact, assets like Registered Retirement Income Funds, Registered Retirement Savings Plans and Tax-Free Savings Accounts will not be covered under the dispensation plan laid out in your will. These types of assets have a beneficiary form that must be completed in order to identify who will receive the funds in the accounts after you are gone. It is vital not to forget to update these account beneficiary forms following changes to your family structure, which might occur following a death or divorce. An experienced estate planning lawyer can help you with this process.

At Garton & Harris, we are available to help British Columbia residents take care of every aspect of the will drafting process. We know exactly what kinds of questions to ask you and what kinds of information to look for in order to determine the most appropriate estate planning measures for your situation, goals and needs.

Probate fees on estate can be determined by legislation

August 20, 2015/in Estate Administration & Probate/by gartonandharris

Probate fees are defined as valuing all of the assets of your estate. What assets are included in determining the value of your estate for probate fee purposes? How is the value of your assets determined?

When you seek to set up an estate plan, you need to be aware that probate fees may come up. There is a myth surrounding these fees that there is an already-made-up list somewhere. This isn’t true. Each of the provinces, including British Columbia, has provincial legislation and this provides the value at which your estate will be determined. For example, in British Columbia, the Ministry of the Attorney General has a guideline to assess probate fees. If you have property here, you may end up paying probate fees on it, however getting a lawyer involved who has experience with estate planning can help.

Do you have a will in place? This may or may not help you with probate fees. If it is written well and follows the letter of the law, you may avoid paying higher fees. Are all your assets included in the will? This also may make a huge difference in what you or your estate pays.

Determining the asset value of your estate can be tricky and may require input from a legal representative who has knowledge in this area. The term “all of the estate” comes into play. Fair market value is used to determine the value of any property, company or asset that you own. The value of real estate can be complicated, but generally the gross worth is used, not the net value. In other words, if you owe money on property, you can pay it off with the funds received from the sale, however, your fees will be based on the received amount.

Research can be a valuable thing. Knowing a bit about estate administration and probate fees can empower you know what you need to do to pay as few fees as possible. Consulting a professional can also help.

Source: Manulife Financial, “Probate Fees: Valuing the Assets of the Estate,” accessed Aug. 20, 2015

Taxes on property owned in the United States

August 11, 2015/in Estate Administration & Probate/by gartonandharris

When you are looking at your estate plan and read the news, you know that a lot of people in British Columbia are buying vacation homes in America. The people doing the buying are doing well and are looking for property that will do well for them and their heirs in the future. There are a few points to ponder, though, when buying property in the U.S.

If you choose to rent your American home out to defray costs of the mortgage you have incurred, know that you will owe both the American Internal Revenue Service (IRS) and the Canadian Revenue Agency (CRA). The good part is that there is an agreement between the U.S. and Canada that gives you a tax break if you paid the IRS. You can receive a foreign tax credit that reduces your Canadian taxes.

A way to foresee what your tax credit will be is to comply with the 30 percent withholding tax that the IRS asks for. Another way to see this is to realize that most investors don’t do this because it doesn’t allow them to take full advantage of the deductibles that you can claim if you rent your U.S. home out.

Changing your principal residence can make you a smarter investor. Deciding, based on income from the property, which one needs to be sheltered from capital gains taxes because you plan to sell it soon will be the one you need to claim as a primary residence.

The number “183” needs to be in your mind when you set your American property up for rental income. This is the maximum number of days that you, as a Canadian, can be in the U.S. before you are considered an American citizen. This residency will cause you to pay American taxes on your U.S. property.

Knowing what the American and Canadian law says should be something on your radar. A lawyer on your team, when you have rental property in the U.S., should be another consideration for prudent homeowners.

Source: MoneySense, “Estate planning tips for U.S. vacation homes,” Romana King, accessed Aug. 11, 2015

Setting up a trust can be baffling

August 5, 2015/in Estate Administration & Probate/by gartonandharris

When you are setting up an estate plan, one of the likely activities you will engage in is setting up a trust. What is a trust? A trust is a legal relationship that allows the trustee, whom you name, to hold interest in money, property and other assets for another person’s benefit. This person is the beneficiary. You will probably want to name the trustee in a written document called a will. There can be multiple trustees and multiple beneficiaries, too.

If you are confused, don’t worry. Legal representatives can advise you and help you transfer funds so that your trust is watertight and unambiguous in a court of law.

There are two types of trusts: discretionary and non-discretionary. You need to understand that these two trusts are dealt with differently by the British Columbia Employment and Assistance (BCEA) legislation.

Discretionary trusts makes it impossible for the beneficiary to have any control over the funds held or even how the money is spent. The trustee has total control over the trust and will make decisions for the beneficiary based on his or her needs and his or her perception of the beneficiary’s wants and needs.

Non-discretionary trusts is one in which the trustee does not have total authority over how the funds are distributed. The beneficiary has some control and the trustee may be required to make certain payments.

Trusts are set up by transferring property or assets to someone to hold in benefit for someone else. The person holding the property can be you, someone you name or can be several people. You will want this document in writing, although it isn’t legally required.

Source: Ministry of Social Development and Social Innovation, “Disability Assistance and Trusts,” accessed Aug. 05, 2015

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