Testamentary Trusts

An accurate and up to date Will

We encourage individuals to have their Wills reviewed every 5 years to ensure they are consistent with present tax legislation as well as their current family and financial situation. Too often Wills are out of date and cause family strife and confusion.  An accurate and up to date Will is the best way to ensure your wishes will be carried out as you intended.

Gift and Wealth Transfer Planning

You need to protect your assets with a proactive approach and an accurate preparation of related returns and elections for gifts, estates, and trusts.

Ensuring your investments are safeguarded through retirement and efficiently transitioned to the next generation is critical to your peace of mind. We assist owner-managed businesses with succession planning and can help with estate planning, creating family trusts and probate tax planning.

In conjunction with corporate restructuring and our valuation’s expert, we ensure your objectives are met when it comes to phasing into retirement and passing wealth to the next generation.

Capital Property:

In most situations, there is a fair market value deemed disposition of capital property held by the decedent at the time of death unless the particular property passes to one’s spouse. Similar rules are in effect for RRSP and Registered Retirement Income Funds. Procedures are available in the first year of the estate to transfer capital losses realized by the estate to the terminal tax return, thereby reducing or eliminating the capital gain triggered on that return.

Proper Will planning will aid in minimizing the tax burden created by this rules. Similarly, different ownership vehicles may avoid the 1.5% Ontario probate fees or what is called now called “The Ontario Inheritance Tax.”

Testamentary Trusts:

Testamentary trusts are an easy, flexible and effective way to minimize tax on income realized on investments that were held by the decedent.  Simply put, the trust acts as a separate person that is taxed at graduated tax rates. For example $100,000 of interest income from these investments that would otherwise be taxable to the surviving spouse will attract tax of approximately $28,400. If that income was split equally by the trust and the surviving spouse, the combined tax would be approximately $17,900, for a savings of $10,500 annually. The after-tax income of realized by the trust may be distributed tax-free to the spouse or any other beneficiary of the trust.

Please keep in mind that the testamentary trust can only be created by a Will. If it is determined at a later date that the trust may not be beneficial, it may be wound up. Better safe than sorry.