Estate Planning and Asset Protection Because the things we cherish most are for keeps L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

You cant take it with you…. "For we have brought nothing into the world, and so we cannot take anything out of it. The Holy Bible (I Tim 6:7) Paul's first letter to Timothy There is a reason they dont put a trailer hitch on a hearse Newfoundland Proverb L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Itinerary Intestate v. Testate The Will Will Components Powers of Attorney (Living Wills) Probating Multiple Wills Trusts Estate Freezes Questions BONUS 8 Tips to protect assets!! L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Intestate – Passing without a will – Statue controls where assets are directed – Statutory scheme sets out that surviving spouse receives a preferential share of the first $200, of the estate if available If children then remainder beyond preferential share divided: – 50/50 if only one child; and – 1/3 to spouse, 2/3 divided between all children if there are no surviving children, the balance of the estate go to grandchildren, parents, siblings, etc. – Very significant to common-law spouses as no entitlement to preferential share Testate – Passing with a will – Expression within a will direct where assets are to be directed L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Expression of Intentions Are an effective planning tools Should represent what you want today (if something occurred) Are not cast in stone Can be redrafted Can be updated (codicil) Should be reviewed occasionally May require changes as life circumstances dictate changes Can only be ONE original Will L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

The Executor / Executrix –Number of executors (odd versus even numbers, co-operation etc) –Individuals vs. Institutions –Age, Location –Knowledge: Accounting Legal Tax Advisory –Familiarity: With your family With your business / financial situation With your specific wishes –Time Availability –Remuneration L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

(…Cont) Guardians –Are their non adult children (under 18)? –Who will be responsible for non adult children? Beneficiaries –Who are they? –What will they receive? –Age at which to receive shares of estate? Powers to encroach (eg discretionary, post secondary education etc) Executor Powers –Sell or convert items into cash –Borrow –Continuation of corporation –Fix value of assets –Employ experts –Use most efficient elections, allocations under ITA. L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Two Types: 1.Power of Attorney for Property 2.Power of Attorney for Personal Care –Legal documents permitting persons the legal authority to make decisions on your behalf –Must be executed prior to capacity being an issue –Referred to as a "Continuing" power of attorney - Are Continuing as the power of attorney survives the mental incapacity of the person who gave the power of attorney –All powers of attorney cease upon death of person who gave the power of attorney L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

–Formerly called Probate (Certificate of Appointment of Estate Trustee with/without a Will) –Process through which the Provincial Government confirms/verifies the authority of the executors named in the will to administer the estate –Confirms assets to be dealt with under the estate and confirms beneficiaries –In 1992, the Ontario government tripled probate fees. –Not required by law to probate a will BUT typically required by institutions –Financial institutions –Land registry offices –Other bodies as required –Requirement arises where cooperation required in order to transfer title to assets –Institutions insist on probate because they believe it provides them with added protection. L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

(…Cont) –In order to probate a will the Provincial government charges a Probate fees –Probate Fee is based on the value of ones estate. –.5% on the first $50, of the value of an estate; and –1.5% thereafter; – An estate with $2 million of assets (regardless of debts) is therefore required to pay a fee of $30,000 to probate the will. –For many estates, this tax is significant enough to warrant planning to avoid it –Most individuals would rather their heirs receive such amounts v. Province L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

–A common probate planning technique is to have two wills one to deal with assets that require probate (the probatable will) –Most bank accounts –Registered Land –Investment Portfolios second will to deal with assets that do not require probate (the non probatable will) –The intention is that the latter will is not probated thus saving probate fee on the value of assets passing under that will –Assets commonly dealt with under non-probatable wills include: private company shares most valuable assets of the deceased (excluding realty) L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Two Types: 1.Inter Vivos – in life 2.Testamentary – through a will –created by yourself either verbally or in writing, by statute or by court –A settlor (person contributing property) asks a trustee (person administering property) to hold the property in trust for a beneficiary (person receiving benefit of property) –There are many types of trusts to suit different circumstances: - Family trusts - Alter ego trusts - Henson trust (for a child with a disability) - Life insurance trusts, etc. L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

–Useful succession planning tool for Entrepreneurs with successful companies –Used by those passing corporations to next generation (with least tax consequence) –Most common: –Involves CCPC to reorganize share structure –Current owner exchanges existing c.s for new voting, redeemable p.s –New class of c.s purchased by children/family trust etc. for their benefit –Future capital gains tax liability captured in new shares –Taxable gain deferred until holders dispose of shares –Assist in determining income tax obligations on death –Can purchase life insurance to offset liability or make other arrangements to pay such taxes L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

Estate Planning and Asset Protection Because the things we cherish most are for keeps L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.

1. Properly structure loans 2. Make gifts properly 3. Structure: partnership interests, corporations etc. 4. Limit personal guarantees 5. Minimize directorships. 6. Consider insurance 7. Domestic contracts 8. Make use of registered plans L AWSON C LARK & O LDMAN PROFESSIONAL CORPORATION _______________ WILLIAM G. LAWSON, B.A., Q.C. ( ) WALKER D. CLARK, B.A., LL.B. COLIN L. OLDMAN, B.COMM., LL.B.