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Estate Planning: Passing Wealth From One Generation To The Next

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The single largest intergenerational wealth transfer in human history is about to take place. Over the next 40 years, baby boomers will pass an estimated $40 trillion to millennials.

How You Transfer That Wealth Is Critical

How you transfer that wealth is critical--particularly if your goal is to ensure that the maximum amount possible makes it to the next generation. That’s where a tax-smart estate plan comes in. The whole idea behind estate planning is to minimize the tax when passing on wealth. One tax that is avoidable is probate tax. Steps like making your non-registered plans jointly held with a spouse or children and designating beneficiaries to registered plans will allow these assets to transfer without triggering probate.

In Ontario, probate fees are $5 for each $1,000 or part thereof of the first $50,000 of the value of the estate and $15 or part thereof  of the value of the estate exceeding $50,000. The greater the value or your assets--this includes investments, residential properties and small businesses--the greater the probate tax.

Tips To Help You Get Started

Here are a few simple tips to help you get started on your estate plan:

Take stock of your financial holdings: Be organized. Have a list of all of your investment accounts and assets and share this list with your executor.

Talk to your children about your plan: There are always horror stories of people passing away without having discussed their estate plan and wealth with their children. The result: their families and executors have to dig to try and figure things out. This makes a difficult time even harder. Have the conversation. Talk to your children about your finances and your plan and let them know who your financial advisor is. According to Legacy Tracker, up to $5 billion of unclaimed assets are accumulating in Canada alone likely because these conversations aren’t taking place.

Don’t be deterred by the generational divide: Many of my retiree clients have different views about spending and saving  than their children do and this is all right. Credit is far more accessible than it has ever been. Younger generations have grown up in an era of abundance--far removed from the scarcity of earlier times. The bottom line: knowledge is power. It’s important to talk to your adult children about your expectations and what you value. Having these conversations will put you ahead of the game and builds comfort.

Insurance products can play a role in your estate plan: For example, if you have a RRIF, upon death 50% of its value will get hit with tax before your children can inherit it. If you ‘wrap’ an insurance policy around that plan, which simply means taking an insurance policy out on half the value of the investment plan, your children receive its full value thanks to the insurance payout. That’s one option. Another is to purchase segregated funds from an insurance company. These funds pay guaranteed benefits upon death. As well, certain types of annuities can be considered as part of an estate plan and will continue to pay out to a spouse upon death.

Consider passing on wealth while you’re still alive: This can help minimize estate tax and most important, you will be able to see your children enjoying the legacy you have created. Many of my clients make payments directly from their investment accounts to their children to help them now.

Call Me or Email Me

My practice is based on referrals. Often those referrals occur within families, with older generations connecting me to their adult children and younger generations introducing me to their retired parents. I understand the dynamics at play when it comes to wealth and family. Estate planning is a critical tool to minimize the cost of passing on your legacy and ensure everyone understands your values. I welcome you to call me at 416-332-3863 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it. and let me help you create an optimal estate plan.



Disclaimer: HollisWealth and the Scotiabank companies do not provide income tax preparation services nor do they supervise or review other persons who may provide such services.  ™ Trademark of The Bank of Nova Scotia, used under licence. 

Meet Allan Small

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