A current trend in the increasingly expensive Canadian housing market is parents helping children or grandchildren and their spouses with a down payment or mortgage on a first home. In Ontario, about 35% of people buying homes now receive assistance from their relatives with a down payment and approximately 38% have a down payment of 20% or more. To see statistics for down payment assistance across the country, please refer to this link. Although such financial assistance is helpful for a child or a young couple looking to get into the housing market, this generous gesture can lead to unexpected and undesired consequences and even disputes, including upon a child's marital breakdown. Without having done the proper planning or evidencing their intention, parents may even see a child lose their gift to a former spouse.
Putting estate planning documents in place can be a daunting task, but it does not end there. Estate planning is an organic process that requires ongoing attention and revision. Circumstances in your life will continue to change and your main objective is to ensure that your wishes and intentions are properly reflected in your plan and documents, both upon incapacity or death. What meets your financial and personal needs now may not do so in the future, so it is important to continue to review your documents, in particular when your circumstances change.
As of today, according to the Gregorian calendar, we are just over one month away from ringing in the New Year. If you are already contemplating your New Year's resolution, we thought we would help out in this blog post by providing you with a shortlist of "thinking points" for your estate planning to help you start 2017 with your best foot forward. What follows are five recommendations gathered from our past year's blog posts to assist in getting your estate plan into even better shape.
In our August 2015 post entitled "Keeping Your Estate Plan Healthy with Periodic Check-Ups" we raised the potentially problematic reality that your estate plan may only be truly up-to-date the day you sign your estate planning documents. We put estate plans in place to ensure that our wishes, intentions and goals are achieved in the event of incapacity or death. For most of us though, our day-to-day lives are perpetually changing--whether it be our relationships, residency, health, assets or values.
On January 1st, several new income tax rules for trusts and estates came into effect. An overview of these significant changes are discussed in our Special Advisory. While we understand that there is an ongoing dialogue between the Federal Ministry of Finance and several professional organizations regarding possible changes to two of these new rules, most, if not all, of the changes are here to stay. These changes do not eliminate the many and diverse benefits of trust planning, nor should trusts, including in Wills or established during one's lifetime, be considered as unattractive options.
A common consideration when completing or updating your estate planning is often how best to protect assets in the event of marital breakdown--whether your own marriage, including a second marriage, or an intended beneficiary's (e.g., a child or grandchild). The need to protect certain assets may be even more pressing when the property is a home or cottage that has been in a family for generations, carrying strong emotional ties and significant memories. Protecting this property can be complicated, however, if it qualifies as a matrimonial home under Ontario's Family Law Act.
Many of you have no doubt read a summary or highlights of the 2014 Federal Budget and noted the proposal to eliminate graduated income tax rates for testamentary trusts. Rather than thinking that testamentary trust planning is dead (no pun intended), in our view there are plenty of reasons to consider using trusts in your Will, including for income tax minimization.
Marriage contracts can certainly be sensible and valuable planning tools for protecting certain property down the road in the event of a separation or divorce.
While there are several tax reasons to consider a trust for current and future planning, sometimes the best reasons to set up a trust now or in a will have nothing to do with tax. Three excellent reasons to use a trust? Matrimonial issues, protecting children and wealth preservation.