Let’s not waste this one
Around the end of WWII, Winston Churchill said “Never let a good crisis go to waste”. Not to be crass, but Covid-19 presents an opportunity to take advantage of depressed business values – namely, with depressed values, non-arm’s length transfers can occur on a tax advantageous basis – and we think this opportunity will only last for a year or so.
Read on to see where CVTrustCo sees opportunities. (more…)
This blog is not intended to provide an analysis of Federal and Provincial relief measures – lots of others are filling that space for us. What we are blogging about is what we are seeing in our business. Before we start, we just want to state that we are all working remotely and that everyone has all the necessary tools required to carry out our tasks. In the event we need to go to the office, we will do on shifts with clear instructions on what to wipe down during our stay and on our departure. So far, so good. (more…)
In the Spring of 2017, we blogged about the use of Alter Ego and Joint Partner trusts (‘Trust(s)”) for those over 65 as excellent estate planning tools. We mentioned that benefits range from probate savings to protection from wills variation litigation. A recent BC Supreme Court Decision has confirmed that when properly constructed and executed, Trusts are a strong defence against family litigation claims. (more…)
In our role as corporate executor and agent, we often see the same scenario – a long term marriage where the husband works outside of the home while his wife left the work-force to raise their children – followed by the husband’s unexpected death. At the time of passing, their financial assets and liabilities are predominately in the husband’s name with his wife having limited access to her own financial resources – things like credit cards are connected to his.
When reading the Will, it seems everything passes to the wife – unfortunately this can take time. When financial institutions are notified of the passing, bank and brokerage accounts are frozen until documents can be produced, and the husband’s credit cards are cancelled together with her companion card. If probate is required, the legal process can take months even for the simplest of estates. This puts the widow in the unfortunate position of having limited access to funds to pay day-to-day expenses and monthly payments such as the mortgage and utilities.
We have found banks can be quite compassionate, but it’s a bit of a hit and miss. If the husband has funds or secured credit facilities, the bank will usually allow for the disbursement of death payments such as funeral costs, and possibly some home expenses. Probate can be an issue – on a $2M estate, probate can be $28,000 (at $14/$1,000). Your bank may advance probate funds immediately prior to filing, but isn’t their general policy, and would be assessed on a case by case basis.
Then comes the mortgage which typically is approved and supported on a cash flow basis. (Note that there are a few financial institutions that will approve an equity only mortgage). If the mortgage or a line of credit is supported by cash flow, a renewal may not be possible, which could eventually force the liquidation of assets, or worse, the family home.
Some solutions
Ok, we told you about all the problems that are clearly not needed at the worst of times. Unfortunately, solving the mortgage problem is hard to plan for. However, some simple steps could help the survivor buy some time until matters get sorted out. Here are a few simple ideas:
There has been a lot written recently about joint survivorship where a joint account and its proceeds pass immediately outside a person’s estate to the survivor without probate or estate administration. This strategy requires legal advice – joint ownership can make things faster and easier – but it could create tax and family law issues with extremely negative consequences.
We have blogged a fair bit in the past about joint partner and alter-ego trusts that can help with probate and other issues. Have a look at https://cvtrustco.com/planning-with-trusts-as-we-age/
The best solution
Again, communication wins the prize – it’s the easy solution to many avoidable problems. Have a discussion about financial assets and obligations so that both spouses are well informed and know what things are and where. If simple changes will help, make them early, long before there is a problem. We know this sounds a bit crass, but how about walking through a dry run – you will be amazed about the things that pop up.
So, this ends our 3rd quarter blog. Looking forward to blogging you around year end.
In our last blog, we spoke about increasing the odds of building a successful Continuity Plan with the core premise for success being “communication”. Unfortunately, one of the conversations that is often forgotten centers around philanthropic interests.
How many people wait to leave something for a cause or organization they care about only in their will? Often, there is no family discussion about the importance of the cause to the deceased – the donation is often a huge surprise when the will is read.
A great way to promote togetherness and communication within families today is to give funds during your lifetime. So, communicate and don’t wait to donate! (more…)
In our August blog, we wrote about Steve Ivacko’s recent receipt of the Family Enterprise Advisor (FEA) designation, via the Family Enterprise Xchange and the Sauder School of Business at UBC. This program helps families in business (and the advisors to those families) to get a better handle on the unique challenges they face.
This month’s post will focus on what typically happens in the context of succession planning, and how this exercise is evolving into continuity planning. If you want to understand this evolution, please read on! (more…)
So, what is the blog title referring to? Quite simply, if the stars align (or mis-align, as it were) your executor may not be the person you picked to do the job. How can this happen? What we’re talking about is the scenario of something happening to your executor while they are in the process of administering your estate. The job then becomes their executor’s! Confused yet? (more…)
In April, we wrote about “Make a Will Week”, and now, May is “Leave a Legacy Month”. In the financial services industry, many people talk about “legacy” mostly in financial terms. But leaving a legacy usually means more than leaving financial assets to family.
This month’s post explores the concept of leaving a legacy and the various forms a legacy can take. If you’ve got your legacy figured out a la Ray Charles, no need to read further, but if you are struggling like most of us, this post may provide a thought. (more…)
April 8 – 14 is Make a Will Week in British Columbia. A 2014 report noted that only 55% of British Columbians had a will. I would venture that from what we’ve seen in our business, for those who have a will, a very large percentage of them are in desperate need of an update. We saw one will where a guardian was named for a child, who is now over 50; that means the will was written over 33 years ago, and we’re guessing a few things changed in those 33 years. If you need any help in understanding why you need a will, with a bit of insight, or if you just want to understand why we started with an Abe pic – Read On (more…)
Our Steve Ivacko recently presented at the Estate Planning Council, Vancouver Chapter, together with BMO’s Lisa Finden. The topic they were tasked with was ‘The Benefits of a Corporate Trustee’. As expected, there was a bit of a back and forth on using a large bank as opposed to a local independent corporate trustee. To not sound too biased, we thought we would post what both presenters could agree on – the 7 benefits of using an independent fiduciary.