Tag: probate tax

05 Aug

Estates Law and Ancient Rome

Suzana Popovic-Montag Wills Tags: , , , , 0 Comments

Few histories are as rich and riveting as the history of Ancient Rome, from the uncertain rise of the Roman Republic to the terrible civil wars that brought its ruin, and from the mad reigns of all-powerful Caesars to the eventual collapse of the Roman Empire, owing, generally, to invasions from without and corruption from within. Its history also shows us many of the roots of our legal traditions, including – as will be the focus of this blog – some precursors to modern-day estates law.

Witnessing Wills

In his biography of Coriolanus, the ancient historian Plutarch says:

“It was customary with the Romans of that age, when they were moving into battle array, and were on the point of taking up their bucklers, and girding their coats about them, to make at the same time an unwritten will, or verbal testament, and to name who should be their heirs, in the hearing of three or four witnesses.”

Ontario’s Succession Law Reform Act only requires two witnesses for proper execution of a will (section 4), although soldiers on active service may proceed by writing their wills without witnesses (section 5).

Capacity

In Ontario, we have instruments at our disposal to prevent or reverse dispositions tainted by incapacity. One may challenge an incapable testator’s will, or one may pre-empt abuse or needless loss with a guardianship application. In Ancient Rome, similarly, those individuals who attempted to give away everything they possessed (what we might call a “spendthrift” the Romans called a “prodigus”) were dealt with as though they suffered from a distemper of the mind.

Inheritance Taxes

Under Augustus – of whom it was justly said that he “made a desert and called it peace” – an inheritance tax of 5% was introduced (with some restrictions, such as that it applied only to well-off individuals). A little over a century later, the Emperor Severus increased this inheritance imposition to 10%. While these figures may seem high (or not high enough, depending on where you stand), they may be much lower than inheritance taxes elsewhere, such as in the United States, United Kingdom, France, Japan and South Korea. In Ontario we do not have an inheritance tax, but there are inheritance-like taxes, like capital gains taxes and probate taxes.

Gifting

There is a marked difference between Ancient Rome and our common law system with respect to gifting between spouses. Unlike modern Ontario, wherein couples often use joint tenancy as a tax-saving estates planning strategy, Roman spouses were prohibited from gifting to one another. While the rationale for this law is moot, it was likely intended to keep apart the property of each spouse’s bloodline.

Testamentary Freedom

The Romans, as well as their civil-law descendants of today, operated under what has become known as “forced heirship”, whereby testators are legally required to give to their children. As a previous blog notes, in modern France, a parent with one child must give that child one-half of his or her property. In Rome, the historian Gibbon says that “if the father bequeathed to his son the fourth part of his estate, he removed all ground of legal complaint”. This is in stark contrast to the common law, in which testators may plan their estates with near-total freedom.

Thank you for reading and enjoy the rest of your day!

Suzana Popovic-Montag & Devin McMurtry

08 Dec

What About Trump and Estates?

Hull & Hull LLP Estate Planning, General Interest, In the News Tags: , , , , , , , , , , , 0 Comments

With his election victory in the not too distant past, President-elect Donald Trump is receiving extensive coverage in the media.  Although the issues following him vary widely, as we at Hull & Hull LLP are estates lawyers, our focus is on the effect the President-elect is having in the estates community.

US Estate Tax

As previously blogged by Hull & Hull LLP, the President-elect is considering abolishing estate tax in the United States altogether.  This is a departure from the current US model which sees married couples exempt for the first $10.9 million in their estate, with any surplus amount being taxed at 40%.  In relation to this current model, recent polls suggest that in 2015 only 10,800 estate returns were filed with about half of those being taxable.

No date has been set for the anticipated repeal.tbqgv72e0b

Capital Gains

As well, the President-elect seeks to change capital gains owing at death such that if capital gains are held until death and valued under $10 million, they will not be taxed.  Apparently, the rationale is to support small businesses and family farms.

As a result of this change, it is predicted that beneficiaries of large estates will be able to avoid paying capital gains on the inherited asset if they do not sell what they inherit.  They can wait to pay the tax when there is an opportune time to do so.  Otherwise, those beneficiaries who are in ready need of money, will have to sell the asset, thereby triggering the tax owing.

So What?

As a result of the changes to estates and capital gains tax, pundits predict the dawn of dynastic wealth (i.e. monetary inheritance that is passed on to generations that didn’t earn it) in the United States of America.

Now, given what we have learned about the President-elect’s platform regarding estate tax and capital gains tax, consider meeting with a professional advisor to ensure your estate plan is up to date.

Find this topic interesting?  Please also consider these related Hull & Hull LLP Blogs:

Noah Weisberg

13 Oct

The US Elections and Estate Tax

Hull & Hull LLP Executors and Trustees, In the News, News & Events Tags: , , , , , , , , , , 0 Comments

Given the intrigue and extensive coverage that the current US election has had north of the border, it is only fitting that we dedicate today’s Hull & Hull Blog to reviewing the position taken by Clinton and Trump with respect to changes to estate tax.

A recent article in Forbes explains that current US laws exempt estates worth $5.45 million or less from paying estate tax.  Estates valued higher pay 40% tax.

Hillary Clinton seeks to increase the taxes owing by the wealthiest from 45% to 65% based on the value of the estate, apparently the highest it’s been since 1981.  Specifically, estates over $10 million would be taxed at 50%, those over $50 million at 55%, and those exceeding $500 million (for a single person) at 65%  As well, Clinton also seeks to lower the exemption for estates valued at $5.45 million to $3.5 million.

Hillary Clinton seeks to increase the estate tax owed by wealthy Americans
“Hillary Clinton seeks to increase the taxes owing by the wealthiest from 45% to 65% based on the value of the estate, apparently the highest it’s been since 1981.”

Trump, on the other hand, seeks to eliminate the estate tax altogether.

According to the Wall Street Journal, the Republicans see the tax as “a patently unfair confiscation of wealth that punishes family-owned business”, while the Democrats view it as “a levelling tool necessary to combat concentration of wealth”.

In Ontario, while there is no inheritance tax, estate administration tax is charged on the total value of a deceased’s estate.  Subject to certain exceptions, this includes the following assets: real estate; bank accounts; investments; vehicles and vessels; all property held in another person’s name; and, all other property, wherever situated, including goods, intangible property, business interests, and insurance proceeds.

As discussed in prior Hull & Hull LLP blogs, new provisions came into force on January 1, 2015, which requires payment of $5.00 for each $1,000, or part thereof, for the first $50,000 and $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.  There is no estate administration tax payable if the value of the estate is $1,000 or less.

Noah Weisberg

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