Seeking Advice on Planning for the a Will or Trust for Aging Parents

Have you gone to a lawyer? As long as you go to a reputable one, you're generally in better hands then trying to figure it out yourself, or by a non-lawyer.

Hint: They generally don't charge too much to draft the will, because the assumption is that you'll go back for the estate procedures. Many will even keep your will physically on file so you can be assured no one will peek at it.

It's not clear if they plan to distribute their assets before death or as part of their estate after death. Province also makes a difference.

There's no inheritance tax or gift tax in Canada, but there is a probate fee (an inheritance tax by another name) that varies by province. It's generally a small %, but can still be a significant amount for a large estate. Distribution before death can avoid that.

Trusts do not escape tax. The tax law changed about 8 years ago to make all trusts pay tax at the top marginal rate. Before that lawyers could create lots of small trusts benefitting from a lower graduated tax rate. The one exception is that you are allowed to create one graduated-rate estate trust (GRE) for some or all of the estate assets to last no more than 3 years after death. The intent being to let you spread out income and deductions over that period.

Some important tax concerns for distributing assets are:

- Unrealized capital gains (real estate or stocks) which will hit all at once on sale or deemed sale at death

- tax-deferred accounts like RRIFs that are automatically collapsed at death

- Loss of some tax shelters on income when assets distributed, like senior's discounts and principal resident of home.

Legal advisors often focus on protection of seniors from potential exploitation by greedy beneficiaries of distribution, but that may or may not be a concern in your family.

I am interested in this. Reason being, is that we are nearing the stage that your parents are in.

One thing, you do mention parentS. IOW, more than one. A will will dictate how assets are distributed when first spouse dies. Usually he or she gets everything, but not necessarily. Some assets like RRIFs or TFSAs or joint accounts need not be in will. However, appropriate form should be completed wherever these accounts are held. At BMO, there are different form depending on type of investments. For example:
https://www.bmoinvestorline.com/adviceD ... ntment.pdf
https://www.bmosmartfolio.com/smartfoli ... )-SF_E.pdf

One issue that I don't know how to avoid, is that when first spouse dies, the surviving spouse will then own both RRIFs. The minimum required withdrawal rate for that spouse will now be much larger with no chance of income splitting. I suppose we could draw more earlier, but the withdrawals are highly taxed.
Once both spouse dies, the RRIFs and taxable accounts will be collapsed - This will result in capital gains and a very large taxable income in one year. Taxes could wipe out 1/2 of the estate?

In anticipation of first spouse passing away, it would make sense to get some expert help. A lawyer may be able to help, but some may just prepare the documents based on information you give them. Big banks like RBC, BMO and others have wealth management departments. I have been thinking of contacting them to see what services they offer. My single neighbor has done this but I need to find out more. It would be good to have a written plan that would kick in at key events.

Thinks to consider:
1). Use an joint alter ego trust (in combination with a will)
2). Think deeply surviving spouse is capable of the performing the role of executor. In our family, grandpa died and 90 year old grandma is the executor. As she can’t even online bank this is an issue.

Things to do today:
1). Make sure all bank accounts are in joint name of both spouses. Otherwise the money could be locked up for months.
2). Make sure the house is in joint name
3). Make sure cars are in joint name
4). Make sure each parent has at least one credit card in their own name All of the Grandma’s credit cards were supplementary cards from Grandpa’s account and they were cancelled by bank when we informed the bank that grandpa had died.
5). Whomever you assign as executor today get them permission to view and talk to CRA on grand parents behalf.
6). Confirm are taxes are filed.
7). Filed taxes is important because you made need them while parents are alive. E.g. we were applying for highly subsidized home care but didn’t have tax returns to prove income as they hadn’t been filed
8). Ask about any life insurance (we found a six figure policy four months after grandpa died).

menotyounoreally wrote: ↑ Thinks to consider:

2). Think deeply surviving spouse is capable of the performing the role of executor. In our family, grandpa died and 90 year old grandma is the executor. As she can’t even online bank this is an issue.

That is probably irrelevant if assets pass directly to the spouse the executor job is pretty simple if everything passes to the surviving spouse. Probate may not even be required. What is a "deeply surviving spouse" ?

Comments re menotyounoreally post.
Questions re items 2. & 5.

Thinks to consider:
1). Use an joint alter ego trust (in combination with a will)
I had a look at this. Presume it is a joint spousal trust for a couple.
Given that bank accounts, investment accounts & home are already set up for succession to named beneficiaries, it doesn't seem it would add value except for complex situations.

2). Think deeply surviving spouse is capable of the performing the role of executor. In our family, grandpa died and 90 year old grandma is the executor. As she can’t even online bank this is an issue.

I agree that surviving spouse may not be capable of being the sole executor. But are there then not ways to hire an executor through a trust company that will handle everything?

Things to do today: ITEMS DELETED THAT ARE ALREADY IN PLACE
3). Make sure cars are in joint name NOT YET - MAYBE SOMETHING I SHOULD DO
4). Make sure each parent has at least one credit card in their own name All of the Grandma’s credit cards were supplementary cards from Grandpa’s account and they were cancelled by bank when we informed the bank that grandpa had died. WE NEED TO TALK TO BANK AND GET AT LEAST ONE cc IN SPOUSES NAME.
5). Whomever you assign as executor today get them permission to view and talk to CRA on grand parents behalf. HOW DO WE DO THAT?

Meant “think deeply if”.


Even if assets are passing to the spouse, it takes some work. Not necessarily hard work but time consuming work. In our case HSBC was good to deal with, td has not yet completed the process 4.5 months afterwards. If I was being uncharitable it is like none of TD’s clients has every died before.

freeagent wrote: ↑ Comments re menotyounoreally post.
Questions re items 2. & 5.

Thinks to consider:
1). Use an joint alter ego trust (in combination with a will)
I had a look at this. Presume it is a joint spousal trust for a couple.
Given that bank accounts, investment accounts & home are already set up for succession to named beneficiaries, it doesn't seem it would add value except for complex situations.

2). Think deeply surviving spouse is capable of the performing the role of executor. In our family, grandpa died and 90 year old grandma is the executor. As she can’t even online bank this is an issue.

I agree that surviving spouse may not be capable of being the sole executor. But are there then not ways to hire an executor through a trust company that will handle everything?

Things to do today: ITEMS DELETED THAT ARE ALREADY IN PLACE
3). Make sure cars are in joint name NOT YET - MAYBE SOMETHING I SHOULD DO
4). Make sure each parent has at least one credit card in their own name All of the Grandma’s credit cards were supplementary cards from Grandpa’s account and they were cancelled by bank when we informed the bank that grandpa had died. WE NEED TO TALK TO BANK AND GET AT LEAST ONE cc IN SPOUSES NAME.
5). Whomever you assign as executor today get them permission to view and talk to CRA on grand parents behalf. HOW DO WE DO THAT?

For 5, set up MyCRA account and can set up representative for each. Else forms will be online.
https://www.canada.ca/en/revenue-agency ... rview.html

Also look at POA health and financial [should they need your help beforehand]

dokechi wrote: ↑ Have you gone to a lawyer? As long as you go to a reputable one, you're generally in better hands then trying to figure it out yourself, or by a non-lawyer.

Hint: They generally don't charge too much to draft the will, because the assumption is that you'll go back for the estate procedures. Many will even keep your will physically on file so you can be assured no one will peek at it.

Having the will at their office is a good measure. But not letting anyone "peek" at it, is a bad idea. Be open / transparent on the will, and their decisions.

Spiritwalker2222 wrote: ↑ Having the will at their office is a good measure. But not letting anyone "peek" at it, is a bad idea. Be open / transparent on the will, and their decisions.

They want to keep the will so you'll go to them and get the fees to apply for probate.

jasonrego wrote: ↑ I am assisting my aging parents in making plans for their final years. They wish to distribute their assets, which include their primary home, rental condo, savings, and cash, to their children, including myself and my siblings.

I am unsure whether a will or trust would be the best option for this purpose.

Hope RFD can provide some suggestions or ideas for things to consider when creating a will or trust? I have conducted some research on my own, but I would like to hear from the collective knowledge for a more informed decision.

Thank you!

If it is exactly this & its all in Canada, thats a pretty easy will. No trust needed.

Any divorces, other wives, different baby mama’s, or half siblings anything like that? Thats when it gets a bit complicated and you need a iron clad will + straight up discussion on their wishes while they are alive.

Spiritwalker2222 wrote: ↑ Having the will at their office is a good measure. But not letting anyone "peek" at it, is a bad idea. Be open / transparent on the will, and their decisions.

Having will at lawyers office is a good idea, especially if your own copy gets lost or destroyed. You are also more likely to look at it occasionally if you have one copy at home! I know our will needs updating. Have to pull it out and decide what needs changing. Further changes may be needed if and when we abandon DIY investing and go to a wealth management outfit.

Spiritwalker2222 wrote: ↑ Having the will at their office is a good measure. But not letting anyone "peek" at it, is a bad idea. Be open / transparent on the will, and their decisions.

Ideally yes. If your family is not prone to fighting over the estate, that would certainly ensure a smooth distribution.

But even apart from creating conflict before the passing, there are countless cases of problems resulting from "peeking", including undue influence to change the will. More than a few have been invalidated when that has been proven. Which is also another reason to have a lawyer: they can witness any changes, and even flag any concerns. Like everything, it's specific to that individual/family.

dokechi wrote: ↑ Ideally yes. If your family is not prone to fighting over the estate, that would certainly ensure a smooth distribution.

But even apart from creating conflict before the passing, there are countless cases of problems resulting from "peeking", including undue influence to change the will. More than a few have been invalidated when that has been proven. Which is also another reason to have a lawyer: they can witness any changes, and even flag any concerns. Like everything, it's specific to that individual/family.

Hi, this is exactly what my aunt is going through. She’s 80 years old, has no kids and her husband just died 4 months ago - left her a paid off house, and half a million in cash. Now when her own will was done up, the other siblings insisted on wanting to know their share when she goes… she showed them their percentages and now they all want to impose a budget on her so she doesn’t go ahead and spend her inheritance money so that they can have it when the time comes…

Very sad this is happening and it’s gonna get worse - now that she sold the house, her siblings wants to control her money since she’s an 80 year old woman with no kids.

I have since reached out to my aunts bank (Scotia) with their wealth management team, and im hoping they can be the third party fiduciary that can be the gatekeeper to my aunt’s assets and stop my other aunts and uncles from taking control..

Does anyone have experience with dealing with the bank’s wealth management team in helping fend off greedy beneficiaries?

I would very much like to know

Unless someone has POA, it's up to her what she does with her money.

Maybe she should appoint you as her POA which would put a stop to the other siblings trying to run things.