Estate Planning. So you have sizeable holdings, but your accountant has told you that you won’t have an issue with taxes. Get it in writing!

Estate Planning. Do you need it.

What will the tax bill be.
Where will the cash come from to pay this tax bill.
What will need to be liquidated.
How long will it take to liquidate the asset?

You are a fairly wealthy business person, with many holdings, and your accountant has said to you – ‘John, you won’t have a problem with taxes’ when your estate is transferred.

Many times I have heard a client tell me that his accountant has told him there won’t be a problem.

CRA is the first in line.
They will want their taxes owing before any of your other creditors.
Without a CRA Estate Clearance certificate…nothing can be distributed.

If you have millions of dollars in assets, spread out over holding companies, real estate, operating companies, investments, trusts, – then you may an issue with estate transfer. From the costs of professional advice at the time of transfer, to the cost of professional accounting and legal paperwork preparation. And of course, the CRA tax bill.

The cost of estate transfer and taxes can be considerable, particularly when transferring to the next generation (spousal rollovers do not have the same issues with cost of transfer and taxes).

If you really feel that you will not have an issue, have your accountant give it to you in writing.  Your accountant may charge a considerable fee to do an evaluation, but you are then in control of your situation, because you are doing a lot of work up front.  You will be able to see timelines and what can and cannot be liquidated.

Timelines are important, because CRA has deadlines for paying the tax owing.

Getting your estate transfer costs, between professional work and taxes will ensure that you have a smoother estate transfer.  If will also help your family members and business associates have a much better understanding of your financial situation and wishes, at the time of your estate transfer.

So get it in writing.

Questions to ask.

Do you  have an executor?
Who will manage the holdings in the meantime?  Will they need to be compensated?

How much will your accountant and lawyer charge for
preparing accurate valuations.
What will the tax bill be.
When are the taxes due?  Will there be liquidity in the estate at the due date to pay for the taxes?

How long will it take before the estate can be legally distributed.
Will your loved ones have money to pay the bills in the meantime.

During the process, and after the estate transfer process has taken place,
what will be left over for your loved ones.

There are countless widows or widowers and children, even adult children who are left with barely anything, after it takes years to settle estates.  You may have had a brief conversation with your accountant about what happens when you pass away.  But is it enough?  Get the information in writing.  This will give you peace of mind.

And – to ensure that your loved ones have cash flow.

Get a reasonable amount of insurance
Make the beneficiary a loved one, to bypass your estate.
There will be no red tape, and no taxes to be paid.
There will be instant cash for your loved ones.

Purchase a reasonable amount of life insurance, that bypasses your estate and goes directly to your loved ones.  Because the rest of your estate may never reach them in the way you intended.

And get it now –  while you can – and are healthy.

For information – please contact me.
Jane Stygall – Life Insurance Advisor

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