Five Ways to Transfer an Estate

Nizam Shajani, CPA, CA, MBA

October 19, 2020

“What I know for sure is that what you give comes back to you.” – Oprah Winfrey.

When creating or updating an estate plan, there are at least five methods for transferring estate assets to family members or other beneficiaries:

1. A Will & Last Testament

• Ensures that property will be distributed to beneficiaries as intended
• Can appoint an executor to act on your behalf and carry out your wishes
• Is subject to probate but probate fees in Alberta were capped at $400 in 2014 – however assets held outside of Alberta may be subject to higher probate fees.

2. Joint Ownership

• Property flows to the joint owner or intended person and is not subject to probate
• Right of Survivorship ensures that the asset passes to a surviving spouse without delays
• Simplifies administration of an estate
• A trust is created if the intended beneficiary of the property were to die first

3. Gift Assets While Living

• Can trigger tax on any accrued gains on capital property at lower rates over a period
• Can assist beneficiaries with a home purchase or help to finance a business while living
• Can include RESP’s or purchase of life insurance for grandchildren
• Can gift assets on your deathbed through an enduring power of attorney

4. Living/Family Trusts

• Involves a settlor who transfers ownership of property to a trustee and provides instructions to a trustee regarding the use of the property for the benefit of the beneficiaries
• A trust is considered to be a separate person for tax purposes in Canada
• Can set up as an inter vivos trust while living or as a testamentary trust pursuant to a will
• Allows for income splitting for family members from investment assets
• An effective tool for succession of a family business to children that are active in a business
• A beneficiary’s creditors cannot seize family trust assets
• Subject to a deemed disposition rule every 21 years

5. Designate a Beneficiary

• Works best with retirement plans, annuities and life insurance policies
• Property flows to the designated beneficiary if over the age of 18 and does not form part of a person’s estate that would be subject to probate

Estate planning is unique for most individuals depending on their circumstances. That makes it important to consult with a qualified and knowledgeable professional advisor when making an estate plan to ensure that objectives for the distribution of estate assets to beneficiaries will be met in a tax and cost efficient manner while considering what it is that you want to achieve.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP