Death and estates | GTAMotorcycle.com

Death and estates

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nobbie48

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I'm not sure if this is a workable idea but having been blind sided in the past I was wondering if an "Estate 101" thread would be viable. Obviously absolutely no liability on the part of the submitter or GTAM.

A lot of people assume that upon someone's death a master plan is revealed and all goes according to plan.

But if you inherit, the cash doesn't land in your hands the day after the funeral. What is the process?

If a person isn't familiar with legal terms it may be confusing.

What does one expect to happen to their estate?

What does an executor do and are there risks to the job?

What are the time lines, IE when do you finally get granny's loot.

If you don't have a will basically your heirs will have to deal with a lot of crap.

If you have a will your heirs may still have to deal with a lot of crap (Contesting) but the will can be torn up and used as toilet paper.

How does granny avoid having her will contested?

Moderators, if this is too over the top please delete the thread.
 
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Just went through this with my mom's estate. She had the wherewithal to prepare everything ahead of time and discuss with myself and my brothers so there were no loose ends. I even had her sign the ownership to her car and write/sign a generic, non-dated sales receipt without a price so I could sell her car after she passed away.
It's a tough thing to deal with, but having everything spelled out ahead of time made the process so much easier.

Everything must be documented and go through probate court, then you pay capital gains or estate tax on some items. We were told to use 'garage sale' values for most of the furniture and stuff to pay the inheritance tax, and then sell it for whatever you can. Real estate is a whole other issue as there can be huge capital gains.

The best advice is to use an estate lawyer to sort things out.
 
Evoex said:
Was wondering when people would notice the capital gains on inheritance now.
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I'm assuming this is new?


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As of October 3, 2016, changes to the principal residence rules significantly limits the ability for an Estate to claim the Principal Residence Exemption.
 
Lightcycle said:
+1

Did something change recently?

You can't escape capital gains, even after death the government will want its (un)fair share before your heirs get their inheritance. This has never changed.
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IIRC it's $5.00 per thousand for the first $50K (=$250) and $15 per thousand for anything more. On a million dollar estate (ie House n Toronto) the total is $14500.00. Came in a couple of years ago.
 
nobbie48 said:
IIRC it's $5.00 per thousand for the first $50K (=$250) and $15 per thousand for anything more. On a million dollar estate (ie House n Toronto) the total is $14500.00. Came in a couple of years ago.
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I gotta ask again, is this a recent change?

From what I know, it's calculated exactly the same as if you just sold everything on the day you died (Fair Market Value) and got taxed at the personal income tax rate in the province where you lived. Plus principal residences still get exempt from cap gains at death.

And I don't think all this has changed recently, unless someone can give me a reference.
 
Evoex said:
As of October 3, 2016, changes to the principal residence rules significantly limits the ability for an Estate to claim the Principal Residence Exemption.
Click to expand...

From: Changes to the principal residence exemption | Lexology

Only for "non-residents and those who hold their principal residence through a personal trust."

The vast majority of people who die are residents and don't own their house inside a personal trust, so this won't apply to them. I think this law was instituted to squeeze some taxes from foreign investors speculating on Canadian real estate.
 
The examples are fine but I was thinking more about the steps along the way. Kruzuki's situation could change if someone contested the will. Multiple lawyers and who pays them. Do executors get sued?

Or let's say granny is living alone in her Rosedale mansion and sonny and family move in to care for her. They are kind so she makes sonny her executor. When she dies sonny doesn't probate the will because granny has divided the wealth over her four kids and sonny doesn't have enough dough to buy the others out. By sitting on the will he can continue to live in Rosedale.

This is definite lawyer country so don't go to court with GTAM as your lawyer. However knowing the path to eventual settlement might keep peace in the family or coin in the pocket.

For example, could the lethargic Rosedale executor be forced to pay market value rent to the estate?

Was the $50K granny gave sonny for a new car a gift or a loan?
 
kruzuki said:
The best advice is to use an estate lawyer to sort things out.
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^------ This.

Wrote the cheque to my lawyer with a smile on my face. He found a dormant bank account of my father's that my mother mustn't have known about. The sitting balance in it exceeded his final tab by a considerable amount. Between that and all the other advice and guidance from him I wouldn't have blinked if his bill was double what I paid him.
 
Re; nobbies "can he sit in the house in Rosedale and not probate the will" , only if the other siblings are idiots. He is legally bound to execute the will, they lawyer up and push the process. He'll have to file final taxes on granny at some point and to settle the estate, he has to settle the estate.
His better option is to burn the will and drag things out. But RevCan will will look to settle, and they want paid.

Tip of the day, most lawyers no longer keep copies of the will so if Mom is looking a little grey, don't think her lawyer will know where stuff is, that may be on you. Know where the paperwork is, especially if you think your being left a house and your brother isn't, and he gets to the will first and burns it, and mom magically passed on without a will.

If you have an ok relationship with your parents, discuss where the paperwork is to be found, have copies. And do this before they loose thier marbles. Its not a touchy subject when they are of sound mind, its practical practice.

And +5 on an estate lawyer, they can walk you through a lot of stuff.
 
To add to this discussion, what happens if the deceased have a mountain of debt, exceeding estate value? Is it possible to inherit debt? Sorry for the ask, never came across that before
 
happycrappy said:
To add to this discussion, what happens if the deceased have a mountain of debt, exceeding estate value? Is it possible to inherit debt? Sorry for the ask, never came across that before
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My understanding is the debt dies with the person. Obviously, the estate gets liquidated to cover as much as possible, then the rest gets written off. I've always wondered about transferring any inheritance i planned to give my kids to them while i'm alive and then do a last hurrah trip on credit. They can chase you, but theres not much they can get out of you.

EDIT:
My wifes grandmother died and the will had my wife down for some money. There was no money left (retirement homes suck you dry) so she got a letter saying what she would have received and no money.
 
some debt does die with you, some will go against the estate. Credit card if in ONE name only dies with the dead guy, joint cards get settled. Surviving spouse could be on the hook for things like mortgages unless there are terminal illness clauses or death insurance. There's a small mountain of fine print with this stuff (hence get a lawyer).

Also our lawyer advised against putting my moms house in my name prior to her death to minimize taxes, his take was if I have an accident or incident (DUI) and a settlement exceeded my insurance or ability to pay, they go after anything in my name (moms house). Its a long shot, but that's why we pay a family lawyer.

Senior homes don't suck you dry, there are no free hotels. You get the care you need and if its an actual nursing home, not an assisted living center they are gov't subsidized. Compared to having my mom or in laws live with me, they are an amazing deal.......
 
It is my understanding that one can't transfer assets into someone else's name to avoid lawsuits but I'm not sure how hard it is to prove the transfer was illegal.

CFB Trenton Colonel David Russell Williams was convicted of rape and murder. Once caught he transferred all his assets into his wife's name supposedly to avoid being sued by his surviving victims. It took as much as five years for some cases to settle and it sounds like the settlements have gag orders.

It seems he loved his wife almost as much as he loved raping and murdering other women.
 
Make sure your executor understands BASIC economics.... and the time value of money.

In our case, death of wife's grandmother and the daughter (wife's aunt) is the executor. Simplified example...

Grandma bought her Condo for 600K+ in peak Alberta oil days. It is now worth 460K (well was three years ago...). Aunt insists on holding on to it thinking it is going to come back--doesn't want to "lose money", three years on now...

The carrying cost is 2% of the 460 value (taxes, condo fees, basic utilities). If sold the money could be easily doing 3 to 4% growth as different investment (or paying debt, mortgage for the beneficiaries, etc.). So over three years she has ****** away almost 83K of the estate in fees (~28K) and lost growth (simple time value of money....~55K). The price is actually slightly down from the 460 today... She will have to sell today at 540K+ just to break even from the day grandma died, my best guess is it is now worth around 455K

In short make sure your executor has half a brain (she has a PhD BTW, not in economics....). While "found money" the executor is in the end controlling other people's money the day after probate is done, and should not be deciding how and when. Rant/tip over...
 
That's another important bit co-executors keep each other honest. Its not bad to make both kids executors, or three if you have them. But if you live in T.O. and make your executor somebody in Washington , your just complicating stuff.

A single executor with no common sense are the ones that use the "any expense related to settling the estate, can be billed to the estate " rule. They go for dinner everytime they go to the lawyer and fly business class to the funeral.
 
I have handled 2 Estates as an Executor. I have no special training in this but I have learned a lot. Both Estates were very different with their own unique challenges along the way. Each took my roughly 2 years from date of death to final distribution to beneficiaries. There's a lot of misinformation in the threads I have read here. Do your homework if you ever have to settle an estate. Yes, the executor/executrix can be held personally liable on several fronts.

Here's my very top-line MUST do's that apply to any Estate settlement:
- take care of the CRA issues (for the deceased) before you consider distribution of any monies to beneficiaries. You are personally liable to the CRA as executor for payment of all the taxes of the deceased - past & present so do your homework on whether their taxes were current or not and there are no outstanding CRA issues.
- get the process for the issuance of letters probate going ASAP (lawyer is required for this application). Once the bank knows their client is deceased, you will need to present them with more than just the death cert. to have access to money for payment of bills on behalf of the deceased. The bank will want Letters Probate issued by the court identifying you as the executor before establishing and Estate account which YOU will then have full access to.
- document every single penny of Income & Disbursements - every penny! Make sure your accounting matches the bank statement balances of both the decease's original account(s) and later, the Estate account. The beneficiaries will scrutinize this closely and challenge you on it if anything is amiss.
- Have a good accountant for the taxes and a lawyer you trust that you can go to for any legal work, including all the sign-offs at final distribution of the Estate. If any beneficiary has an issue with how things have been handled and won't sign off in the end then you will need to have a court determine the finalization of the Estate and that costs big $$. If your records are clear and clean, that won't (or at least shouldn't) happen.

Being an executor/executrix is NOT a glamorous job by any means. It IS pretty interesting though. Requires a lot of highly detailed work but there is never a dull moment. Remember, all your legitimate expenses can be claimed against the Estate and, you can charge an Executor fee. Standard is 2.5% of Income & 2.5% of disbursements. This can vary depending on the complexity of the Estate.
 
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