1. 13 - 1 COPYRIGHT © 2008 by Nelson, a division of Thomson Canada Ltd Chapter 13 – Preserving Your Estate

2. 13 - 2 Chapter 13 – Preserving Your Estate Chapter 13 - Learning Goals LG 1-Describe the role of estate planning in personal financial planning and identify the seven steps involved in the process. LG 2-Recognize the importance of preparing a will and other documents to protect you and your estate. LG 3-Explain how your assets are taxed at death. LG 4-Explain how trusts are used in estate planning. LG 5-Explain how gifts and life insurance are used in estate planning. Learning Goals

3. 13 - 3 Chapter 13 – Preserving Your Estate Internet Links and On-Line Resources A Death in the Family – Public Legal Education Association of SaskatchewanA Death in the Family Headspring Consulting checklist when reviewing financial plans including estate plans.checklist Useful tools in constructing a will – William J. Genereux Barrister & Solicitor.Useful tools in constructing a will The Learning Centre on Fiscal Agents Financial Services Group Web site containing useful information on wills, estates and general estate-planning advice.Learning Centre on Fiscal Agents Financial Services Group Web site Estate Planning User’s Guide on the Fiscal Agents Knowledge Bank web site.Estate Planning User’s Guide Bank web site. Choosing a Guardian for Your Children from Nolo’s Legal EncyclopediaChoosing a Guardian for Your Children Choosing a Guardian, Andrew E. TanenbaumChoosing a Guardian Caring Connections provides some useful guidance on how to ensure your end of life wishes are met.Caring Connections Tax advantages of donating publicly traded securities. TD Bank Financial Group.Tax advantages of donating publicly traded securities Scotia McLeod Tips on Probate Web Links

4. 13 - 4 Chapter 13 – Preserving Your Estate Key Chapter Terms and Definitions Estate Planning Probate fees Probate estate Will Intestacy Testator Codicil Letter of last instructions Probate process Executor Administrator Power of attorney Living will Power of attorney for health care Power of attorney for health care Joint tenancy Right of survivorship Tenancy in common Community property Trust Grantor Trustee Beneficiaries Inter vivos trust Revocable living trust Irrevocable living trust Alter ego trust Joint partner trust Testamentary trust Spousal trust Family trust Terms

5. 13 - 5 Chapter 13 – Preserving Your Estate Definitions Estate Planning The process of developing a plan to administer and distribute your assets on death in a manner consistent with your wishes and the needs of your survivors, while minimizing taxes. Terms

6. 13 - 6 Chapter 13 – Preserving Your Estate Definitions Probate Fees The fees levied by a province or territory on the assets of a deceased individual that are transferred by will. Terms

7. 13 - 7 Chapter 13 – Preserving Your Estate Definitions Probate estate The real and personal property owned by a person that can be transferred at death according to the terms of a will, or according to intestate laws in the absence of a valid will. Terms

8. 13 - 8 Chapter 13 – Preserving Your Estate Definitions Will A written and legally enforceable document that expresses how a person’s property should be distributed on his or her death. It is also used to name a personal representative to guide the disposition of the estate and to name a guardian for persons and property. Terms

9. 13 - 9 Chapter 13 – Preserving Your Estate Definitions Intestacy The situation that exists when a person dies without a valid will. Terms

10. 13 - 10 Chapter 13 – Preserving Your Estate Definitions Testator A person whose will directs the disposition of property at his or her death. Terms

11. 13 - 11 Chapter 13 – Preserving Your Estate Definitions Codicil A document that legally modifies a will without revoking it. Terms

12. 13 - 12 Chapter 13 – Preserving Your Estate Definitions Letter of last instructions An informal memorandum separate from the will and containing suggestions or recommendations for carrying out the decedent’s wishes. Terms

13. 13 - 13 Chapter 13 – Preserving Your Estate Definitions Probate process The court-supervised process of estate liquidation that occurs when a person dies; it consists of collecting money owed the decedent, paying his or her debts, and distributing the remaining assets to the appropriate individuals and organizations. Terms

14. 13 - 14 Chapter 13 – Preserving Your Estate Definitions Executor The personal representative of an estate designated in the decedent’s will. Terms

15. 13 - 15 Chapter 13 – Preserving Your Estate Definitions Administrator The personal representative of the estate appointed by the court if the decedent died intestate (without a valid will) Terms

16. 13 - 16 Chapter 13 – Preserving Your Estate Definitions Power of Attorney Legal document that authorizes another person to take over one’s financial affairs and act on his or her behalf. Terms

17. 13 - 17 Chapter 13 – Preserving Your Estate Definitions Living will A document that states, in very precise terms, the treatments that a person wants and to what degree he or she wishes them continued if he or she becomes terminally ill. Terms

18. 13 - 18 Chapter 13 – Preserving Your Estate Definitions Power of attorney for healthcare A written power of attorney authorizing an individual (an agent) to make healthcare decisions on behalf of the principal during such times, either temporarily or permanently, when the principal is unable to make such decisions. Terms

19. 13 - 19 Chapter 13 – Preserving Your Estate Definitions Joint tenancy A type of ownership by two or more parties, with the survivor(s) continuing to hold all such property on the death of one or more of the tenants. Each joint tenant can unilaterally sever the tenancy. Terms

20. 13 - 20 Chapter 13 – Preserving Your Estate Definitions Right of survivorship The right of surviving joint owners of property to receive title to the deceased joint owner’s interest in the property. Terms

21. 13 - 21 Chapter 13 – Preserving Your Estate Definitions Tenancy in common A form of joint ownership under which there is no right of survivorship, and each co-owner can leave his or her share to whomever he or she desires. Terms

22. 13 - 22 Chapter 13 – Preserving Your Estate Definitions Community property A form of marital property co-ownership wherein all income earned and property acquired by either spouse while living together are automatically owned equally by both spouses. Terms

23. 13 - 23 Chapter 13 – Preserving Your Estate Definitions Trust A legal relationship created when one party, the grantor, transfers property to a second party, the trustee, for the benefit of third parties, the beneficiaries, who may or may not include the grantor. Terms

24. 13 - 24 Chapter 13 – Preserving Your Estate Definitions Grantor A person who creates a trust and whose property is transferred into it; also called settlor, trustor, or creator. Terms

25. 13 - 25 Chapter 13 – Preserving Your Estate Definitions Trustee An organization or individual selected by the grantor to manage and conserve property placed in trust for the benefit of the beneficiaries. Terms

26. 13 - 26 Chapter 13 – Preserving Your Estate Definitions Beneficiaries Those who receive benefits – property or income – from a trust or from the estate of a decedent; may or may not include the grantor. Terms

27. 13 - 27 Chapter 13 – Preserving Your Estate Definitions Inter vivos trust A trust created and funded during the grantor’s lifetime. Terms

28. 13 - 28 Chapter 13 – Preserving Your Estate Definitions Revocable living trust A trust in which the grantor reserves the right to revoke the trust and regain trust property. Terms

29. 13 - 29 Chapter 13 – Preserving Your Estate Definitions Irrevocable living trust A trust in which the grantor relinquishes the title to the property placed in it and gives up the right to revoke or terminate the trust. Terms

30. 13 - 30 Chapter 13 – Preserving Your Estate Definitions Alter ego trust An inter vivos trust created by an individual over 65 to hold property. Assets may be rolled over tax-free to the trust. Terms

31. 13 - 31 Chapter 13 – Preserving Your Estate Definitions Joint partner trust An inter vivos trust created by two individuals over 65 to hold property. Only the grantor and the partner have access to the assets and income from the trust while they are both alive and only the survivor has access to the income and capital on the passing of either the grantor or the partner. Assets may be rolled over tax-free to the trust. This arrangement allows assets to pass tax-free between the grantor and the partner and avoids exposing assets to probate fees. Terms

32. 13 - 32 Chapter 13 – Preserving Your Estate Definitions Testamentary trust A trust created by a decedent’s will and funded through the deceased’s estate. Terms

33. 13 - 33 Chapter 13 – Preserving Your Estate Definitions Spousal trust A trust created by an individual for the benefit of their spouse; assets may be rolled over tax- free to the trust. Terms

34. 13 - 34 Chapter 13 – Preserving Your Estate Definitions Family trust A trust created by an individual for the benefit of the member of a family. Terms

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