Latest / Your Estate Matters / Episode 68 - How to Avoid Tax Surprises in Estate Planning with Amanda Doucette
Transcript
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</script><meta http-equiv="content-type" content="text/html; charset=UTF-8"><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_timing={}; DOCS_timing['pls']=new Date().getTime();</script><meta property="og:title" content="YEM Amanda Doucette Transcript"><meta property="og:type" content="article"><meta property="og:site_name" content="Google Docs"><meta property="og:url" content="https://docs.google.com/document/d/1YYvZ7gUSdJjXO96hJJrMjiSelSPRL4Rux_HGqct8bis/edit?usp=sharing&usp=embed_facebook"><meta property="og:image" content="https://lh7-us.googleusercontent.com/docs/AHkbwyL0AYURXiUo90c91E-hbjQB9HkMIKUh_-qKg8gkfh2QxYKI8ri064jpbMAWD8hbe34t5MCtiVsYl09lqjwPdEwdTU7_OH0gHj7n-s8P_f0_TslX20s=w1200-h630-p"><meta property="og:image:width" content="1200"><meta property="og:image:height" content="630"><meta property="og:description" content="Nicole Garton 00:00:02 Hello and welcome to Your Estate Matters presented by Heritage Trust. Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it's estate related, we'll be talking about it. We're having the conversations today t..."><meta name="google" content="notranslate"><meta name="viewport" content="width=device-width, user-scalable=no, initial-scale=1.0, minimum-scale=1.0, maximum-scale=1.0"><meta http-equiv="X-UA-Compatible" content="IE=edge;"><meta name="fragment" content="!"><meta name="referrer" content="origin"><title>YEM Amanda Doucette Transcript - Google Docs</title><link rel="shortcut icon" href="https://ssl.gstatic.com/docs/documents/images/docs-favicon-2026-v2.ico"><link rel="chrome-webstore-item" href="https://chrome.google.com/webstore/detail/apdfllckaahabafndbhieahigkjlhalf"><script nonce="m712ZkliTsroHR4Sg03FKg">_docs_webfonts_fontFaces = null; _docs_webfonts_iframe_fontFaces = null;DOCS_timing['wpid']=new Date().getTime();</script><style 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Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it\u0027s estate related, we\u0027ll be talking about it. We\u0027re having the conversations today that will help Canadians protect their families, their assets and their legacies tomorrow. \n\nHello and welcome to Your Estate Matters. I\u0027m Nicole Garton. When most Canadians think about estate planning, they think about making a will, maybe a power of attorney. But what many people do not realize is that one of the biggest problems in an estate isn\u0027t legal, it\u0027s actually tax. A tax bill and death can dramatically reduce what is left for your family. It can create stress for executors. Tension between beneficiaries and in some cases even force the sale of assets people hope to keep. So today we\u0027re talking about the main things Canadians need to know about tax and how to plan ahead so their family is not left dealing with avoidable surprises. My guest is Amanda Doucette, a partner at Stephenson Hood Thornton Beaubier in Saskatoon, and she\u0027s one of Canada\u0027s leading tax trust and estate lawyers.\n\nNicole Garton 00:01:18 She has a masters of Law in Taxation from Osgoode Hall, has taught wills and estates at the University of Saskatchewan College of Law, and she\u0027s the host of the Tax Chick Podcast, where she makes Canadian tax more accessible and easier to understand. Amanda, welcome. We\u0027re so glad you\u0027re here. Amanda, welcome. Thank you so much for joining us.\n\nAmanda Doucette 00:01:42 Thank you so much for having me.\n\nNicole Garton 00:01:44 So it\u0027s amazing to have an illustrious practitioner on our pod and an experienced podcaster herself. Do you want to jump in and tell us actually about your podcast? Well, I.\n\nAmanda Doucette 00:01:55 Host the Tax Check podcast. I started it in 2020 because I found when Covid was happening, there were so many business owners who needed information on the tax changes and they had no safe space for where they could get it. And so I started podcasting about that, and it kind of branched out into other tax and estate planning topics. And we\u0027re in season seven now. So it\u0027s been going for a while.\n\nNicole Garton 00:02:17 And it\u0027s you\u0027re very funny.\n\nNicole Garton 00:02:19 And you managed to make tax entertaining. I don\u0027t know how you do that, but.\n\nAmanda Doucette 00:02:23 Well, I think tax is fun and I really want to encourage other people to think tax is fun too. So I\u0027m glad that that\u0027s how you feel when you listen to it.\n\nNicole Garton 00:02:31 And Amanda and I are colleagues in this area, and I see her from afar every year at our annual big conference, the Society of Trust in the State Practitioners National Conference. And not to put you on the spot, Amanda, but you won a big award at the conference just last week. Do you want to tell us tell our listeners what you want?\n\nAmanda Doucette 00:02:52 I won the Michael Karofsky Volunteer of the Year award at the National conference, which was a huge shock and surprise and honor. I know like you, we both really love this organization and what it does for the practitioners in it, as well as for the public, and I\u0027m really passionate about it. So it doesn\u0027t feel like work. When I\u0027m doing volunteer work with this organization.\n\nAmanda Doucette 00:03:13 It feels like an extension of my practice. And so it was just such a surprise and an honor to be recognized for it.\n\nNicole Garton 00:03:20 So you\u0027re an incredible volunteer, but also an incredible thought leader. So let\u0027s jump into it so our listeners can get the benefit of all your expertise. But do you want to first share what drew you to this niche, like the intersection of tax and estates?\n\nAmanda Doucette 00:03:35 Well, I mean, early in my career, I was really a more typical tax lawyer. So my background is not in tax. I have an undergrad in psychology. I intended to be a family law lawyer. I kind of fell into tax and the first couple of months of my practice, and I started out doing tax litigation. And in our firm at the time, if you wanted to do tax litigation, you needed to take the in-depth tax course with Cica Canada at the time now CPA Canada. 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var modelChunkParseEnd = new Date().getTime(); var parseTime = modelChunkParseEnd - DOCS_modelChunkParseStart; window['DOCS_appBootstrapReadyPromise'].then(function() {DOCS_initialLoadTiming.incrementTime('mp', parseTime); DOCS_warmStartDocumentLoader.loadModelChunk(modelChunk);});})();</script><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="m712ZkliTsroHR4Sg03FKg">(function() {var modelChunk = {"chunk":[{"ty":"is","ibi":30929,"s":"\nNicole Garton 00:27:56 And what is it again? It\u0027s it\u0027s 36 months. Correct.\n\nAmanda Doucette 00:27:59 36 months.\n\nNicole Garton 00:28:00 Yeah. Correct.\n\nAmanda Doucette 00:28:01 And so it doesn\u0027t automatically give you the out. You still need to file stuff and do stuff. But presuming you\u0027ve done then filed what you need to, we can avoid the tax problem there. But when we name anybody else, you know, if we name the estate, if we name adult kids, if we name godchildren, I\u0027m not sure who it is, but whoever it is, if we name someone else, we have a mismatch between the asset and the tax, because what will happen is the full value of that asset falls into the estate and is taxed in the estate of the deceased, and then the full value of the asset that was cashed out by the financial institution is given to the beneficiary.\n\nAmanda Doucette 00:28:36 So if you have different beneficiaries receiving the asset, then those left to receive the residue of the estate, you have someone that\u0027s paying a tax bill for someone else\u0027s assets. So you have a mismatch. And so I always think when you\u0027re doing beneficiary designations, you should start from the place of, “I am going to name the estate that makes the most sense.” We have cash then falling into the estate. You have cash matching the tax bill and everything matches. 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But if they\u0027re not, if there\u0027s different people receiving the residue of your estate, you\u0027ve just taken a big scoop out of their ice cream pail and put it in the kids ice cream pail, and that can be a huge issue.\n\nNicole Garton 00:29:53 And another error is people forget to update their beneficiary designation. So I see things where, you know, someone started a job 20 years ago, they put their sibling down. They subsequently, you know, got married, had kids. You know, they have employer matches, and the person passes away. And the the registered funds are going to a completely different place than what they thought or they don\u0027t update it after divorces. A very messy situation. So what would you say to people to avoid those kinds of errors?\n\nAmanda Doucette 00:30:26 Well, I think people operate on assumptions a lot. I\u0027m sure you see this a lot in your practice as well. I\u0027ll have someone come in and they\u0027re emphatic to me, this is what I own.\n\nAmanda Doucette 00:30:35 This is how I own it. This is who I\u0027ve named. And I go, great. Let\u0027s double check. Let\u0027s just make sure we\u0027re all on the same page. And it\u0027s never what they think. And it\u0027s because somebody hasn\u0027t followed through in the past, right? They might have instructed someone to change something and didn\u0027t get done or someone forgot to take a box. It happens. It\u0027s human error. And so I think when you\u0027re doing that, that review, so your initial estate planning actually go check the titles to your properties especially, like I mean, your principal residence. I\u0027m guessing if you\u0027re married it\u0027s probably jointly in your names and we\u0027re not too concerned about it. But double check the title and make sure there isn\u0027t an old mortgage sitting on it. 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Then I think there\u0027s some value in putting in place some form of cabin agreement. So, you know, there\u0027s a co-ownership agreement. This is how we\u0027re going to govern ourselves. This is how we\u0027re going to determine how things are going to be paid. We have some clients that want to put the cabin into trust that has its own pickles associated with it. Because are we also funding the trust with additional monies to help pay for repairs, etc.? There\u0027s now different tax filing obligations. So it\u0027s its own pickle. But I think that the problem with cabins is not even so much a tax problem. It\u0027s a logistical administrative problem of what do we do when we have multiple people owning it that are not married, right, that aren\u0027t thinking necessarily in the same way about the property?\n\nNicole Garton 00:36:58 So I\u0027ve mediated numerous cabin disputes over the years when I was still practicing, and they were colorful. And the situation is often, you know, someone\u0027s moved internationally, you know, someone has much more money than the other.\n\nNicole Garton 00:37:12 And so they\u0027re kind of bossing everybody around because they can pay for things. And how do we equalize time, how to equalize expenses, you know, and people have different parties and interests in their lives. So it\u0027s important to think about that in advance. Another mistake people make is they do crazy things to avoid probate. And they accidentally, I shouldn\u0027t say crazy. They do. They do things to avoid probate and they accidentally create tax or other disputes. Do you want to talk about the no nos in that respect?\n\nAmanda Doucette 00:37:44 Sure. So I mean, in Saskatchewan we call it Tim Hortons Coffee Row. Somewhere in a Tim Hortons in Spirit Wood Saskatchewan, someone\u0027s passing out information about probate that it is really bad and you need to avoid it at all cost. And so we often find people come into us and they\u0027ve already done something. What have they done? They\u0027ve added the kid onto title. They\u0027ve added the kid onto the bank account and they don\u0027t want to pay those probate fees, like, oh my goodness, we\u0027re not paying probate fees.\n\nAmanda Doucette 00:38:10 And so when you take a step back and you think about that. Okay. Now we have to worry about what you\u0027ve done, because you\u0027ve actually triggered a bunch of stuff that you didn\u0027t intend to trigger. Probate planning differs depending on province. So I mean, you\u0027re in B.C.. Yeah. There is some validity to some probate planning in B.C. and some probate planning Ontario. But under the guidance of a legal professional, not on your own. When you go ahead and you add, for example, kids on a title to property, which is one of the more common ones that we see. You\u0027ve now done a couple of things. One, you are deemed under the Income Tax Act who have disposed of your interest in that property at fair market value, regardless of whether the kid received any funds for it. And you need to report that and pay tax on that disposition in your tax return, unless the land is farmland and it can qualify under exemptions, etc.. But let\u0027s just assume we don\u0027t have any of those exceptions.\n\nAmanda Doucette 00:39:03 You\u0027ve just triggered a tax problem if you\u0027re adding them onto farmland. I hope they have GST numbers because now you have that issue associated with it. If that child gets divorced, they\u0027re now on the title to your property, and that becomes part of their family property that\u0027s subject to division. If they get sued, creditors can come after your property. Also, you can\u0027t sell your property without your kids\u0027 permission or mortgage it. And there is tons of case law where parents add the kids on in order to avoid probate. They have a falling out with the child. They want the child off the title, and the whole thing ends up in court because you can\u0027t get them off without the kids permission. Many of our provinces in Canada have a Torrens system of land registration, which is like an absolute system where the title is sort of the law. 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var modelChunkParseEnd = new Date().getTime(); var parseTime = modelChunkParseEnd - DOCS_modelChunkParseStart; window['DOCS_appBootstrapReadyPromise'].then(function() {DOCS_initialLoadTiming.incrementTime('mp', parseTime); DOCS_warmStartDocumentLoader.loadModelChunk(modelChunk);});})();</script><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="m712ZkliTsroHR4Sg03FKg">(function() {var modelChunk = {"chunk":[{"ty":"is","ibi":44566,"s":"\nAmanda Doucette 00:39:56 So all of those things come into play. In addition, we\u0027ve seen in the last couple of the years that the government has put in place these new rules for trust filings. And so you have to be careful that what you\u0027ve done doesn\u0027t fall into the category of a bare trust that requires you to do an extra filing with the government, which is never a wonderful thing either. So all of those things have to be taken into account when we go past the land and we look at the concept of adding an adult child to a bank account. We see this a lot where a parent says, oh, it\u0027s just easier if my child has access to my bank account. He will find I get that, but what does that mean? If you have four kids and one kid is on your bank account, does that mean when you die they get the balance of that account? Or does it mean that they\u0027re just looking after it for the benefit of all the beneficiaries? Let\u0027s make sure we\u0027re very clear about what we\u0027ve done.\n\nAmanda Doucette 00:40:47 We need to make sure that if documentation is signed at the bank, it matches what\u0027s in your will. And everybody understands what the plan of attack is. So when you\u0027re trying to engage in this sort of probate planning, don\u0027t do it until you\u0027ve talked to somebody because there are a lot of costs associated with it, including fees, like to do these transfers that might far outweigh any benefit that you might be receiving. And once you\u0027ve done it, it\u0027s too late to go back.\n\nNicole Garton 00:41:15 So there\u0027s a sad case in BC where a mum, put her, you know, one son put him on title. Didn\u0027t even tell him. And he unfortunately got into some business difficulty. Ended up with an $800,000 judgment against him. Lawyers ran a land title. Well, isn\u0027t he entitled to this valuable home? Next thing you know, mum has a judgment against, registered against her home. She went to court. She was unsuccessful in removing that judgment. So that\u0027s a very word to the wise. so you mentioned something about trust reporting.\n\nNicole Garton 00:41:54 And, you know, things are wildly changing year by year. This year, it seems to, you know, whoever the policy, people are changing their minds often at the very last minute. Do you want to talk about what some of those considerations are like? And are you advising trusts to clients as much because I know a lot of practitioners, given the increasing complexity, the tax issues, we\u0027re seeing less trust planning. What do you see in your practice?\n\nAmanda Doucette 00:42:25 Well, I think it depends on what type of trust. Right. So when we take a step back, a trust in Canada is a legal concept. It\u0027s governed by legislation in each province. And it\u0027s this idea that someone puts something into a bucket. It\u0027s looked after by another person called a trustee for the benefit of people called beneficiaries. That\u0027s the idea. And a trust up until the last couple of years, whether it was created on death or in lifetime, was a really popular estate planning tool until around 2017.\n\nAmanda Doucette 00:42:54 And it\u0027s gotten much worse in the last few years because it had a lot of great tax benefits, and it also did not require much in the way of tax filings. So there\u0027s different categories of trust. There\u0027s what we call inter vivos trusts, which are trusts created during lifetime. And then there\u0027s testamentary trusts, which are trusts that are created on death. So I think it\u0027s easier to start with these testamentary trusts first because we\u0027re talking about an estate planning matter here. So what we used to see before the rule changes is we would see somebody had a will and there would be like ten trusts in there. Everybody was getting a trust. 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var modelChunkParseEnd = new Date().getTime(); var parseTime = modelChunkParseEnd - DOCS_modelChunkParseStart; window['DOCS_appBootstrapReadyPromise'].then(function() {DOCS_initialLoadTiming.incrementTime('mp', parseTime); DOCS_warmStartDocumentLoader.loadModelChunk(modelChunk);});})();</script><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="m712ZkliTsroHR4Sg03FKg">(function() {var modelChunk = {"chunk":[{"ty":"is","ibi":48601,"s":"\nAmanda Doucette 00:43:45 So it was like being able to clone yourself and help to really do that lovely split of the actual tax burden. And so we did that all the time. Then once the rule changes came in, the government said, no, no, no, we\u0027re stopping that now. Trusts are all going to be taxed in wills at the highest marginal tax rate, unless you fall into certain categories? One of which, of course, is like a qualified disability trust. So if we\u0027re trying to provide for long term dependency, the government is still prepared to support that. But outside of that, the big tax benefit doesn\u0027t exist. Now, that being said, there\u0027s also non-tax reasons for having a trust. And we get so stuck sometimes on the tax that we forget about the non-tax. All the non-tax reasons are still there. So if you\u0027ve got $1 million that you\u0027re going to be leaving to a 25 year old, is that a great plan? Probably not. Sometimes we put a trust in place to protect people from themselves.\n\nAmanda Doucette 00:44:41 We put a trust in place with an adviser that keeps an eye on the funds. We might put in clauses or terms that require certain financial education, that require payment of portions of that trust property over time to see what they do with it. that sort of set parameters as to when funds can be given. So it can be used as a teaching tool and a way of protecting the funds. If you have large sums of money. You know, I\u0027m talking 10 million plus that you\u0027re leaving, that you\u0027re maybe looking to do a form of legacy planning. So you want this to be for your children, their children, their children\u0027s children. And you want this to last for a long, long time, and you want to encourage philanthropy and certain activities. Well, it totally makes sense to have a trust structure at that point. It probably makes sense to have a corporate trustee of some form that\u0027s going to still be there as people die, right? That\u0027s an objective force that can be looking after the trust, because now we\u0027re not really concerned about what fees are going to be charged.\n\nAmanda Doucette 00:45:38 We\u0027re not really concerned about the taxes. We\u0027re trying to achieve a different objective with that trust. So I think testamentary trusts still have their value. You just need to figure out your reason why you have to be very careful if you\u0027re using trusts in the farming and fishing context, for example, because there are certain rules that have to be met for the tax benefits of the transfers of those properties to be effective. And if you put stuff into trust, you can potentially not fall into those rules. So if you own farming and fishing property, you really want to consult someone when you\u0027re working on your will. Because even if you\u0027re thinking about leaving something in trust, if you\u0027re leaving it in trust past the age of 18, we have to talk about what the concept, what the context is of that, and whether or not it might not fall into the exception anymore. So let\u0027s test some entry trust. But if we think about trust in lifetime, there are two categories of trust we see often: alter ego trusts and joint partner trusts.\n\nAmanda Doucette 00:46:35 And those are often used for the purposes of probate planning. There\u0027s very specific rules that have to be met for you to be able to use those types of trusts and very specific beneficiary lists coming out of them, and tax consequences at the end of them. But one of the big perks is that if something is in one of those trusts, you therefore don\u0027t own it personally, and it falls outside your estate so you don\u0027t pay probate fees on it. You don\u0027t have to go through the probate process with it. 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var modelChunkParseEnd = new Date().getTime(); var parseTime = modelChunkParseEnd - DOCS_modelChunkParseStart; window['DOCS_appBootstrapReadyPromise'].then(function() {DOCS_initialLoadTiming.incrementTime('mp', parseTime); DOCS_warmStartDocumentLoader.loadModelChunk(modelChunk);});})();</script><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="m712ZkliTsroHR4Sg03FKg">(function() {var modelChunk = {"chunk":[{"ty":"is","ibi":52811,"s":"\nNicole Garton 00:47:31 They have the ability to sue to vary your state. But these trusts, if you\u0027ve effectively put assets into those trusts, they\u0027re often a very effective litigation bar. So I should mention that\u0027s quite often the context in BC.\n\nAmanda Doucette 00:47:44 No, that\u0027s a great point because that\u0027s again, a non-tax reason for doing them right. Helps for creditor protection and helps for these variation claims. And you\u0027re correct, like B.C. and Nova Scotia, for example, have very broad categories of who qualifies as a dependent. And you can be a child of your parents till you\u0027re 90 and can have an ability to make a claim against the estate versus a province like Saskatchewan, where once you turn 18, unless you have some sort of long term dependency, you no longer have a claim against the estate. And so when you\u0027re thinking about protecting assets, that\u0027s another great reason, non-tax reason to have those types of trusts. The other type of trust that we see often, I call it like the discretionary family trust. I think that\u0027s a standard thing.\n\nAmanda Doucette 00:48:24 And so for many years we saw, as a standard planning tool, if you had a private corporation, for example, and mom and dad owned all of the common shares in that company, they own a company that runs a restaurant, let\u0027s say. So ABC Restaurant Company, Mom and dad each owned the common shares, which are the shares that go up and down in value. And we realize that on the death of mom and dad, those shares go into the yard sale and we can defer the tax on the first to die, but once the second of them dies, those shares are on the lawn and we can\u0027t pull them off. And likely they paid $50, $20 for those shares. And now, if their restaurant is really successful, the shares are worth, I don\u0027t know, $500,000. We have a really large gain. The difference between the $20 and the 500,000 is your gain, half of which is taxable and goes into income. So we have to think about that and how we\u0027re going to pay that tax.\n\nAmanda Doucette 00:49:21 So a lot of people do something called an estate freeze, which is you take those common shares, you put them in the tax freezer and think of them like ice cube trays. They go in as liquid, they come out as a frozen ice cube. And now mom and dad own what we call preferred shares, which have a fixed value that is equal to the value of those previous common shares. And every year on a go forward basis, we start thawing the ice cubes a little bit and we start redeeming those shares, and they get paid dividends to sort of get them down as low as possible. And all the new growth in the company accrues to a family trust. A family trust is not you. And so therefore, when you die, the family trust shares do not go on the lawn with the yard sale. The family trust is often run by mom and dad as trustees. The beneficiaries are usually mom, dad, kids. Other companies that are controlled by that group, sometimes other trusts that may include one or more of that group as beneficiaries, and we siphon off additional funds into that trust.\n\nAmanda Doucette 00:50:20 Prior to amendments, the tax rules to bring in the concept of tax on split income, or TOSI, these trusts were incredibly favorable, allowing broad income splitting opportunities, they were fantastic. We saw them being used to fund university education for kids and all sorts of things. Then the government brought in TOSI and kind of shut down most of that. And so now these trusts still have limited tax benefits, but they still have a lot of non-tax benefits. And so again, it\u0027s about thinking through what benefits work for you. So for example, these trusts if, let\u0027s say Mom and Dad wanted to sell this restaurant business, and they sold it for $1 million, and they wanted to use capital gains exemption, but they didn\u0027t have a lot of shares left. But their kids did have capital gains exemption left. Well, you can multiply the capital gains exemption use by allocating some of these sale proceeds out to beneficiaries of the trust to pay, you know, little to no tax, less save. 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The other reason is when you\u0027re not ready to transfer power. So if we have parents who have kids that are, let\u0027s say, in their early 20s and they haven\u0027t quite figured out who\u0027s coming into the business yet, mom and dad still want to control. Well, it gives you some time to decide whether or not you\u0027re bringing kids into the business. You might be able to funnel some funds out to them. Again, that has limitations due to Tosi, but if you\u0027ve got them working in the business, you can funnel some money out to them, but you\u0027re not giving them the shares yet. It gives them time. also helps to provide an extra layer of protection from a family law perspective, if it is a wholly discretionary trust that nobody is guaranteed a certain piece of the trust. There\u0027s arguments that the value of a person\u0027s interest in that trust is zero. Now there\u0027s case law that goes both ways across the country on this. But I\u0027ve had a lot of people say it\u0027s been helpful for them in a separation context, because you have to disclose all of your assets.\n\nAmanda Doucette 00:52:20 Okay. I own an interest in this family trust. What\u0027s the value of your interest? Well, zero. No one\u0027s ever given me anything, and no one\u0027s planning to give me anything, so that helps as well. But it\u0027s something you\u0027d want to be considering what your value is. But that\u0027s another example. The thing about trusts that\u0027s sort of annoying now, even leaving aside TOSI and this inability to split income like you used to be able to, is that now we have all these filing obligations, tax filing obligations for trust. So for many years, if your trust never really had income at the end of the year, you didn\u0027t file a tax return. You didn\u0027t have to do anything. Now you do. And so now there\u0027s this huge disclosure requirement where the names and social insurance numbers and residency of the beneficiaries, the settlor, the trustees, all have to be disclosed in a schedule 15 on an annual basis, whether or not a tax return technically needs to be filed. It\u0027s a lot of information going to the government.\n\nAmanda Doucette 00:53:16 We still don\u0027t know exactly what they\u0027re going to do with it. It\u0027s kind of annoying and it\u0027s kind of expensive. The other thing that we have to remember about these family trusts, and the thing I think is most problematic, is they\u0027re complex. They add complexity. If having a corporation and knowing you have to move funds from the corporation to yourself already gives you anxiety, you have a separate set of bookkeeping, you\u0027ve got a different bank account. Well, you add a trust in the mix and you try to open a bank account for the trust. The financial institutions are going to want everything but your firstborn child. Now you\u0027re moving money from a corporation into a trust bank account. Now you have bookkeeping for the trust. You have bookkeeping for the corporation. You\u0027re moving funds around. Then you have legal documentation showing the moving of those funds. It\u0027s not hard, but it\u0027s complex. And if you\u0027re not happy with that, if that doesn\u0027t make you excited, then maybe that\u0027s not a structure that works for you.\n\nAmanda Doucette 00:54:07 And so I think recognizing the complexity is also really important.\n\nNicole Garton 00:54:11 Can you also just touch on the limitations now with respect to real estate? They took out the ability to do primary residence exemption unless it\u0027s a qualified disability trust. And we\u0027ve got these serious disclosure requirements. Do you want to just reference that?\n\nAmanda Doucette 00:54:27 I must say that I, I know them generally, but it\u0027s not something that I work in regularly because I have never had a primary residence into a trust in my life. I think that made no sense. But they have done some crackdowns recently that if you take your primary residence and you put it into a trust, there are now limitations, almost a complete restriction on whether or not you can continue to claim your principal residence exemption once it\u0027s in the trust, because you don\u0027t own it anymore. no different than the fact that if your lifetime capital gains exemption exists with you as a person, not with a trust, not with a corporation, and so you do have to consider what assets you\u0027re putting 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var modelChunkParseEnd = new Date().getTime(); var parseTime = modelChunkParseEnd - DOCS_modelChunkParseStart; window['DOCS_appBootstrapReadyPromise'].then(function() {DOCS_initialLoadTiming.incrementTime('mp', parseTime); DOCS_warmStartDocumentLoader.loadModelChunk(modelChunk);});})();</script><script nonce="m712ZkliTsroHR4Sg03FKg">var DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="m712ZkliTsroHR4Sg03FKg">(function() {var modelChunk = {"chunk":[{"ty":"is","ibi":61279,"s":"\nAmanda Doucette 00:55:02 Similarly, if you put a cabin property into a trust, great. But how is it being funded? How are we dealing with renovations? How are we dealing with ongoing costs? And then we have to remember that every 21 years these trusts have a birthday, It\u0027s a tax birthday. And every 21 years, the trusts, much like you, are deemed to have a yard sale. And so if you\u0027re putting properties like that in your trust, there\u0027s going to be this deemed sale of those assets every 21 years and a tax to pay. Where\u0027s the money coming from to pay the tax? And so you have to do planning in advance of that 21 years to either give the assets out to capital beneficiaries in the trust, or do some other sort of reorganization work to try to defer the tax problem. But again, that\u0027s more complex. That requires pre-planning and it requires some fees and costs.\n\nNicole Garton 00:55:54 And it\u0027s more restrictive now because you used to be able to do a successor trust. They took that away.\n\nNicole Garton 00:55:58 So I think the take home is consider very carefully if you want to trust there\u0027s a lot of increasing complexity and limitations. And, you know, maybe it makes sense from a long term governance perspective, but definitely get talked to someone smart like Amanda and get the good tax advice. so, so this has been amazing. Before we wrap up, I want to do a quick myth busting round, if that\u0027s okay. So I\u0027m going to throw out some common assumptions, and I want you to tell me whether they\u0027re true or false or somewhere in between. So are you ready?\n\nAmanda Doucette 00:56:29 I\u0027m ready.\n\nNicole Garton 00:56:30 Okay. Number one, if I have a will, my tax planning is done.\n\nAmanda Doucette 00:56:33 False.\n\nNicole Garton 00:56:36 Adding my child to the title of my home is a Smart probate strategy. All my riff goes to my name beneficiary, and that\u0027s the end of it. No tax consequences for me. \n\nAmanda Doucette 00:56:50 Oh, false. Estate tax planning is mostly for wealthy people.\n\nAmanda Doucette 00:56:53 False, false. Everybody pays tax regardless if you\u0027re wealthy or not. Okay?\n\nNicole Garton 00:56:58 Okay. So is there last question. What are the top three things every Canadian should review this year if they want to avoid tax surprises in their estate? Give us a checklist.\n\nAmanda Doucette 00:57:08 Well, I think you want to review your beneficiary designations and actually review them like a confirmation of who\u0027s been named. And make sure you understand the consequence of what you\u0027ve named. I think that\u0027s important. The second thing is you do want to know where your will is. Like, do you have one? Where is it located? Where is the original? I don\u0027t care where the copy is. We can\u0027t use the copy. We need to know where the original is. There should be just one original, not three originals. So we have lots of confusion about that. I think the third one I would take a peek at is your non-registered accounts, because those ones get forgotten, and those are the ones that are going to generate that kind of surprise tax bill and the first to die. So taking a peek at those and saying to yourself, “okay, if I died tomorrow, what would the tax bill be on those non-registered accounts?” Those would be the three things I\u0027d look at.\n\nNicole Garton 00:57:49 So Amanda, this has been amazing and you make it so accessible for people. How can people find you to find out more?\n\nAmanda Doucette 00:57:57 Well, I do have a website: taxchick.ca that\u0027s where I have a resource section with free blog posts that are available on estate planning, corporate tax, tax litigation issues, stuff for business owners. I also have my podcast, the Tax Chick Podcast, which is on all major streaming platforms. I\u0027m on LinkedIn, so give me a follow: Amanda Doucette. 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They affect ordinary Canadian families, and the financial consequences of not addressing them can be significant for anyone listening. Here are the key messages. First, estate planning is not just about your will. The tax side of your plan can have a bigger impact on your family than almost any other decision you make. Second, your RRSP or RIFF may be the largest tax liability in your estate, not the largest gift. Make sure your beneficiary designations are coordinated with your will. And third, do not take probate planning shortcuts without understanding the tax trade offs. And fourth. Work with a team. Your lawyer, your accountant and your financial advisor need to be talking to each other, not working in isolation. And then to thank you again for sharing your expertise with us. And thank you to our listeners for joining us on Your Estate Matters. If you found this episode helpful, please share it with someone who may benefit from it and join us next time for another practical conversation about estate planning, estate administration and legacy in Canada. \n\nThis podcast is for informational purposes only and should not be considered individual, legal, financial, or tax advice. Make sure to consult the advisor of your choice to advise you on your own circumstances.\n\nNicole Garton 01:00:12 Thank you for joining us for this episode of Your Estate Matters. If you like this podcast, make sure to follow it on your podcast platform of choice. Whether you\u0027re planning your own estate or you\u0027re acting as executor for somebody else\u0027s heritage, trust can help partner with Heritage Trust to protect your family, your assets, and your legacy. If you\u0027d like more information about Heritage Trust, please visit our website at Heritage Trust Now.\n\nNicole Garton 01:00:43 This podcast is produced by Podfather Creative.\n"},{"ty":"as","st":"paragraph","si":65669,"ei":65669,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":66806,"ei":66806,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":66807,"ei":66807,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67018,"ei":67018,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67019,"ei":67019,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67491,"ei":67491,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67492,"ei":67492,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67564,"ei":67564,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"paragraph","si":67565,"ei":67565,"sm":{"ps_klt_i":true,"ps_awao_i":true,"ps_sm_i":true,"ps_ls_i":true,"ps_il_i":true,"ps_ir_i":true,"ps_al_i":true,"ps_bl_i":true,"ps_sd_i":true,"ps_sb_i":true,"ps_sa_i":true,"ps_lslm_i":true,"ps_br_i":true,"ps_bbtw_i":true,"ps_kwn_i":true,"ps_bt_i":true,"ps_ifl_i":true,"ps_bb_i":true,"ps_pbb_i":true}},{"ty":"as","st":"bookmark_range","si":65669,"ei":67565,"sm":{"brs_id":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"comment","si":65669,"ei":67565,"sm":{"cs_cids":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"doco_anchor","si":65669,"ei":67565,"sm":{"das_a":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"ignore_spellcheck","si":65669,"ei":67565,"sm":{"isc_smer":true,"isc_osh":null}},{"ty":"as","st":"import_warnings","si":65669,"ei":67565,"sm":{"iws_iwids":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"link","si":65669,"ei":67565,"sm":{"lnks_link":null}},{"ty":"as","st":"markup","si":65669,"ei":67565,"sm":{"ms_id":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"named_range","si":65669,"ei":67565,"sm":{"nrs_ei":{"cv":{"op":"set","opValue":[]}}}},{"ty":"as","st":"suppress_feature","si":65669,"ei":67565,"sm":{"sfs_sst":false}},{"ty":"as","st":"text","si":65669,"ei":67565,"sm":{"ts_un":false,"ts_un_i":true,"ts_sc":false,"ts_it_i":true,"ts_fgc2":{"hclr_color":"#000000","clr_type":0},"ts_st_i":true,"ts_bgc2":{"hclr_color":null,"clr_type":0},"ts_fs_i":true,"ts_ff_i":true,"ts_bgc2_i":true,"ts_va":"nor","ts_it":false,"ts_bd_i":true,"ts_va_i":true,"ts_fs":11.0,"ts_ff":"Arial","ts_st":false,"ts_sc_i":true,"ts_bd":false,"ts_fgc2_i":true,"ts_tw":400}}],"revision":367}; 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