Last week I had the pleasure of attending OsgoodePD’s Taxation in Wills and Estates module, which is part of their Intensive Program in Wills & Estates. Over the next few weeks, you will find a series of blogs from my colleagues on their thoughts on the various courses offered through the Program.
The courses are focused on a wide variety of topics pertinent to Wills and Estates such as consent and capacity issues, passing of accounts and fiduciary accounting, and powers of attorney and guardianships in both contentious and non-contentious matters. Mohena Singh kicked off our series providing a primer on Estate Planning and Administration, and offered useful practice tips.
The first session of the Taxation module focused on tax planning in a will and was taught by Matthew Getzler of Minden Gross LLP. Next, the fundamentals of estate freezes were expertly led by Elie S. Roth and Ray Rubin of Davies Ward Phillips & Vineberg LLP.
Matthew Getzler provided some excellent pointers on wills and tax planning, discussing how spousal trusts are a meaningful tool that can lead to significant tax savings. The reason is that spousal trusts defer taxes until the death of the surviving spouse. Certain conditions must be met of course.
The spousal trust has to be structured so that surviving spouse receives all of the net annual net income of the trust, and that no one else but the spouse is entitled to any of the income or capital of the trust during the spouse’s lifetime.
As a litigator, it resonated that Matthew was cautious of the type of planning where individuals leave children on the title for homes or investments. Matthew explained that it can create many issues if it is not done properly. Given the case law on resulting trusts, Matthew stated that this type of planning was ripe for litigation and issues. A more reasonable and cost-efficient way to achieve these goals is through bare trustee corporation planning.
In the second module, Grace Chow of Cadesky Tax and Robert Kepes of Morris Kepes Winters LLP brought our focus to taxation on death and post-mortem tax planning.
Grace Chow added some helpful tips to the theme of spousal trusts for anyone with a cross-border US-Canada connection. Grace mentioned that the deceased must be resident in Canada immediately before death for the rollover to apply, and usually so does the surviving spouse. However, if the surviving spouse is a US resident, the Canada-US Tax Treaty will allow the surviving spouse to be treated as a Canadian resident and the rollover can apply. However, the Tax Treaty only treats the spouse or common law spouse as a Canadian resident.
I hope you found these insights as valuable as I did. The important takeaway is that although there are some preferential tax treatments available during the estate planning stage or on death, it is important to engage a professional such as a tax lawyer or accountant to assist with your specific situation.
Thank you for reading.
Endrita Isaj