Man­ag­ing Your Money: You can but maybe you shouldn’t

The Southwest Booster - - OPINION - SUB­MIT­TED BY IN­VESTORS GROUP FI­NAN­CIAL SER­VICES INC.

asy” and “sim­ple” de­ci­sions don’t al­ways add up to the right fi­nan­cial/es­tate plan­ning an­swers. Here are a few “be­cause I can” de­ci­sions to con­sider just a bit more care­fully.

I will add an adult child as the joint owner of my in­vest­ments or prop­erty be­cause it will make the dis­tri­bu­tion of my es­tate eas­ier.

While there are cer­tain sit­u­a­tions in which joint own­er­ship of as­sets can be a sound strat­egy, you need to look at it from many an­gles:

Are you will­ing to give up con­trol of the as­set(s)?

If your child sep­a­rates or divorces, do you want the as­set(s) po­ten­tially di­vided be­tween your child and an ex-spouse?

What hap­pens if your child goes bank­rupt?

Are you okay with dis­in­her­it­ing the chil­dren of your child, if your child dies shortly be­fore you do?

Do you in­tend that your joint owner should share the as­set(s) with other ben­e­fi­cia­ries (in­clud­ing your other chil­dren) in your will or has no obli­ga­tion to share?

If the joint own­er­ship con­tract be­tween you and your child is not ex­plic­itly worded, it could lead to ex­pen­sive sib­ling in­fight­ing that could eat up the as­sets.

Why go to the ex­pense of re­tain­ing a lawyer when all I need is a Will Kit?

For starters, you won’t have ac­cess to ex­pert ad­vice about whether your clause selections are ap­pro­pri­ate to your situa- tion. A sim­ple “kit” pro­gram won’t ask key ques­tions about your fam­ily and es­tate struc­ture, such as:

Is yours is a blended fam­ily? If so, you could in­ad­ver­tently dis­in­herit chil­dren from a pre­vi­ous re­la­tion­ship.

Is a ben­e­fi­ciary dis­abled? If so, it is usu­ally ad­van­ta­geous to es­tab­lish a dis­cre­tionary trust in your will to pro­tect that ben­e­fi­ciary’s abil­ity to re­ceive so­cial as­sis­tance pay­ments. If the ben­e­fi­ciary is men­tally dis­abled, then a trust will also al­low you to choose some­one to man­age the ben­e­fi­ciary’s in­her­i­tance.

Is the char­i­ta­ble or­ga­ni­za­tion you wish to leave your es­tate to prop­erly regis­tered with the CRA as a char­ity? If it isn’t, you won’t get a tax credit.

Nor will a “kit” pro­gram pro­vide tax ad­vice or as­sess the dif­fer­ent tax li­a­bil­i­ties each ben­e­fi­ciary could face, lead­ing to an in­equitable dis­tri­bu­tion of your es­tate. In ad­di­tion, when a lawyer pre­pares your will, the lawyer has cer­tain obli­ga­tions un­der the law to make a ba­sic as­sess­ment of your ca­pac­ity, which could be­come im­por­tant ev­i­dence later on, if some fam­ily mem­bers want to chal­lenge your will.

I will give sig­nif­i­cant sums of money to fam­ily mem­bers dur­ing my lifetime.

Whether the money is “gifted” or “loaned” to your chil­dren for what­ever rea­son, with­out the proper ad­vice and di­rec­tion, there could be a mine­field of prob­lems down the road. For ex­am­ple, if the ar­range­ment isn’t prop­erly docu- mented, it could be ar­gued that it was, in­deed, a loan or may re­sult in one child re­ceiv­ing a sig­nif­i­cant gift dur­ing your lifetime that un­fairly re­duces another’s in­her­i­tance.

What you should or shouldn’t do in sit­u­a­tions like th­ese isn’t al­ways clear. Your le­gal and pro­fes­sional ad­vi­sors can bring clar­ity you need to ev­ery as­pect of your fi­nan­cial life.

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