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Tag: Inheritance

  • Colorado homes acquired by inheritance reach record 12% of home transfers

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    In “The Game of Life,” landing on the “Inherit a House”  square is one of the most coveted on the board. In real life, a home or condo is also one of the greatest financial gifts that can be passed on, especially in a housing-strapped state like Colorado.

    More Coloradans are seeing the big wheel spin in their favor each year. But the pace won’t be enough to make up for a housing shortfall estimated at more than 106,000 units in 2023, according to a report from the Colorado Department of Local Affairs.

    About one in eight homes that traded hands in Colorado last year represented an inheritance, which is a little below the share that new home sales represented, according to data from the real estate research firm Cotality.

    “Inheritance in the 12 months ending in 2025 totaled nearly 12,000 homes, which happened to be almost 12% of all total property transfers. This is higher, both in terms of the number and the share, than previous years — in line with the national trend,” said Matt Delventhal, a principal economist at Cotality.

    Cotality measured the 12-month pace of home sales, new and existing, and inheritance transfers in Colorado through October for the odd-numbered years from 2019 to 2025. Existing home sales were down sharply between 2021 and 2025, falling from 128,899 in 2021 to 75,833 in 2025.

    Likewise, new home sales fell from 22,064 in 2021 to 15,610 in 2023 to 12,755 in 2025, according to Cotality.

    Inheritances, by contrast, continued to chug along, going from 10,052 in 2021 to 10,243 in 2023 to 11,945 in 2025. The gap between new home sales and inheritances was only 810. Inheritances are contributing almost as much to inventory as new home construction.

    A lack of enough new construction, especially for first-time buyers, has pushed up existing home prices. High prices, when combined with higher mortgage rates, have resulted in fewer sales. Because home sales have fallen so much, the “inheritance” share of all home transfers has nearly doubled in Colorado, from 6.2% in 2021 to 9.9% in 2023 to a record 11.9% in 2025.

    “The increase in the share is a bit sharper than the national trend, mostly because Colorado resales drop off a bit more sharply in 2023-25 than the national average,” Delventhal said.

    Nationally, the market share of inherited homes went from just under 5% in 2021 to 6.8% in 2023 to 8.7% in 2025, which translated into 412,174 homes and condos passed down. Those percentages also reflect the 12-month tally through October.

    “The behavior around inherited homes does feel different from what it did pre-2022. Historically, most estate transfers functioned as pass-through transactions. Heirs would inherit the property, do some light clean-up or updates, and put it on the market fairly quickly. That still happens, but I am seeing more cases where families pause and evaluate other options first,” said Cooper Thayer, a Realtor with the Thayer Group in Castle Rock.

    Because inherited homes have little or no debt and strong rent potential, and because selling has become more difficult, heirs are increasingly looking at keeping the homes as rentals or to move into, he said.

    While Colorado’s share of inherited homes is above average, it lags behind California, a more expensive market where 18% of home transfers involved an inheritance, according to Cotality.

    In California, favorable tax laws locked in lower property tax rates and provided beneficiaries with an incentive to use an inherited home as a primary residence. For the first time this year, passed-down homes ran more than double the number of new homes sold in the state, according to Cotality.

    Prop 19, passed in 2020, limited the transfer of a lower tax base only to homes that a child or heir actually occupied, and excluded rental homes. It also excluded only the first $1 million in added value beyond the original value used to determine property taxes. The state, however, could see a ballot measure this year that would restore some of the more generous property tax breaks to heirs.

    At first glance, the increase in home inheritances seems to validate the “Silver Tsunami” hypothesis. Baby Boomers, those born between 1946 and 1964, were not only huge in numbers, but also more likely to own homes than earlier generations. By the time they turned 65, individuals born in 1948 owned 50% more homes than those who were born in 1938 did at the same age.

    Compared to prior generations, baby boomers have also shown a greater propensity to hold onto their homes more tightly, adding a different meaning to “until death do us part.” About six in 10 say they don’t plan to ever sell their homes, and three in 10 are holding on so they can pass the properties down, according to HousingWire.

    “They are going to have to take me out of there in a box, even though it is a two-story home,” said Jennifer Antonio, an agent with Sotheby’s International Realty in Denver.

    Antonio, who puts herself in the never-sell boomer group, said she and her husband purchased their first home when she was 23. They did so on two minimum wage salaries, proof of just how much better the market did in matching options to incomes. Now the average age of a first-time homebuyer is 38, she said.

    Her four millennial children still don’t own, despite being college-educated. With her parents too old to host big events, her home has become a stable gathering place for the family, where adult children can flow in and out, and where everyone gathers for Thanksgiving and Christmas.

    “I need to stay in that home,” she said. Antonio said her older clients complain about a lack of good options if they do sell, which can keep them locked into homes that have become burdensome. Builders, seeking to get as much square footage as they can on a lot, aren’t building enough products like ranch homes that would appeal to older buyers.

    That baby boomer hesitancy, Cotality says, is “effectively freezing the anticipated flow of supply.”  Boomers can’t hold on forever, but it could be well into the 2030s before a substantial amount of older housing stock better-suited for young families emerges. Younger generations could find themselves stuck renting for longer than they would like.

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  • What’s more important: your wealth or your legacy? – MoneySense

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    Let’s dig into this by first understanding what will happen if your dad continues doing what he is doing and he doesn’t add money to his TFSA. If he lives to 90, earns 5% on his investments, your home appreciates 3%, and we assume a general inflation rate of 2%, he will leave you about $654,000 in today’s dollars. That is made up of his share of the house, which isn’t taxable, and his registered money, which is taxable. I will use today’s dollars (values) for everything as we go. Actual amounts in the future will be higher due to inflation.

    TFSA strategies to enlarge your estate

    Now the question is: Can we increase the amount eventually going to you by drawing extra from the life income fund (LIF) and RRIF to add to his TFSA? Your dad has never contributed to a TFSA, so he has $102,000 of past contribution room he can add, plus his future annual contributions. His LIF withdrawals will be subject to maximum withdrawal limits, so he won’t be able to fully deplete his LIF. 

    Your dad has contribution options: he can top up his TFSA right away or do it gradually over time. If he tops it up in the next two years, he will have to draw about $135,000 from his RRIF and LIF each of the two years. This will cause him to lose his OAS in those years, but his RRIF will be depleted by age 85. His issue then will be that the maximum LIF withdrawals won’t be enough for him so he will have to start drawing from his TFSA.  

    TFSA contribution room calculator

    Find out how much you can contribute to your TFSA today using our calculator.

    Even still, this approach will increase the after-tax estate value to $689,000, which is better than continuing on the current approach, leaving you $654,000.

    A more optimal approach is to make up the past contribution limits by adding $15,000 a year to the TFSA to catch up the past contribution room of $102,000, plus the future annual contribution limits. This approach also means no OAS clawback, ever.  

    This gradual approach will leave you $703,000 with only $10,500 paid in tax. Remember, no TFSA left you with $654,000 and $160,000 was paid in tax.

    But be careful what you ask for

    Clearly, if your dad’s wish is to maximize the amount of money left to you, the best approach is to draw extra from the registered accounts, keeping his taxable income below the OAS clawback threshold, and contributing that amount to his TFSA with you as the beneficiary.  

    But what if that is not your dad’s wish and instead it is to maximize his wealth rather than the value of his estate? There are a number of reasons why some people will put wealth ahead of estate value, such as the parents who tell me they have helped their kids enough, those who want to leave money to charity, couples and singles with no children, and others with concerns about having enough money.

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    I know it sounds like the two goals, wealth accumulation and estate maximization, will result in roughly the same thing but they produce different outcomes. Think about it: when your dad draws money from his RRIF he pays tax resulting in less going to his TFSA which reduces his net worth. Leaving the money in the registered accounts maintains his net worth. 

    Here is an example where wealth accumulation and giving to charity is the goal. If your dad follows the estate maximization plan and adds to his TFSA, the charity will get $707,000 and about $7,000 is paid in tax. Contrast this with your dad not drawing extra from his RRIF to add to his TFSA strategy; the charity receives about $796,000 and the estate has tax owing of $17,000. That is about an extra $90,000 going to the charity. 

    Is your plan flexible?

    I should point out that, other than wealth or estate maximization, there is another reason for having money in TFSAs and that is to provide taxable/non-taxable income flexibility. If, in the future, your dad is ever faced with large bills, such as for long-term care, it will be good to have a non-taxable income source to keep him from moving up an income tax bracket or losing a government benefit. 

    Alex, you are on the right track. From the information provided it looks like your dad should be drawing extra from his RRIF to contribute to his TFSA. Just make sure this meets his goals.

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    About Allan Norman, MSc, CFP, CIM


    About Allan Norman, MSc, CFP, CIM

    With over 30 years as a financial planner, Allan is an associate portfolio manager at Aligned Capital Partners Inc., where he helps Canadians maintain their lifestyles, without fear of running out of money.

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    Allan Norman, MSc, CFP, CIM

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  • How to bridge the gap until an inheritance – MoneySense

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    CPP/OAS strategy without other pensions

    You can begin your Canada Pension Plan (CPP) retirement pension as early as age 60 or defer it as late as age 70. For each month you defer it after age 60, the pension rises.

    If you start your pension at 60 and continue to work, you must continue to contribute to the pension until at least age 65. This will generally increase your pension, with an adjustment each year, but not as much as deferring it.

    Since you already started your CPP, there is not much of a strategy there, Esther. But for others reading along, a healthy senior who expects to live well into their 80s should strongly consider deferring the start of their pension. They will receive more cumulative CPP dollars if they live to their late 70s. Even after accounting for the time value of money from drawing down other investments, or not being able to receive and invest the payments, someone living to their mid-80s and beyond may be better off financially. 

    There is also the benefit of having more guaranteed income that is simple and indexed to inflation, providing cost of living and longevity protection—especially for someone without a defined benefit pension plan. 

    Although you plan to start your Old Age Security (OAS) at age 65, Esther, you may want to think twice about this for two reasons:

    1. The same logic as CPP applies. You can defer your OAS as late as age 70 and it, too, rises for each month of deferral. If you are healthy and expect an average or longer than average life expectancy, deferral may give you more lifetime retirement income, despite the temptation to have more cash flow today. 
    2. There is an OAS pension recovery tax if your income exceeds about $95,000 in 2026. If you are still working and receiving both CPP and OAS, you want to be careful about losing some of the OAS pension you are hoping to begin. This means-tested clawback of OAS is 15 cents on the dollar above that threshold, causing an effective tax rate of 43% to 52% and rising at $95,000 depending on your province or territory of residence. 

    Given your expected low income in retirement, it could be a costly decision to start OAS. There is also a low-income supplement called Guaranteed Income Supplement (GIS) that an OAS pensioner with a modest income may qualify for that could factor into your future income planning, Esther. 

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    Travelling in retirement

    Your plan to travel while you are young and healthy is an important reason not to work too long or wait to do things too late into your retirement. There needs to be a fine balance between saving for tomorrow and living for today—it is one of the biggest risks of retirement planning. 

    Conventional retirement planning methods focus on minimizing the risk of running out of money before you are 100, but this can also maximize the risk that you miss out on life experiences.

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    Counting on an inheritance

    You must be careful budgeting for an inheritance that could be lower than expected, and may come later than anticipated. It is a risky part of retirement planning even if you have full visibility about a parent’s finances. 

    The substantial nature of the inheritance you foresee, Esther, is an important factor in your own retirement planning. Given that you are 64, I assume your mother is well into her 80s or beyond. 

    In your case, the key to bridging the gap until that inheritance is definitely real estate. 

    Real estate strategy in retirement

    The benefit of owning vs. renting from a financial perspective is overblown, in my opinion. Until recently, real estate prices appreciated at an extraordinary pace in many Canadian cities, leading some to believe it is the key to wealth creation.

    Real estate should not be an investment, unless it is a rental property earning rental income. A principal residence should probably grow at slightly above the rate of inflation, in line with wage growth. Perhaps this is the reason prices have flatlined or declined recently. Although interest rates have risen, they have only gone up to normal levels, not extraordinarily high rates. 

    A discussion of real estate price appreciation often ignores property tax, maintenance, renovations, and interest costs, as well. 

    All that to say that selling and renting would not be a failure in this financial planner’s opinion, Esther. But you would want to consider an apartment or seniors’ community where you could live as long as you wanted, as opposed to a condo with a landlord that has risk with regards to being a long-term residence. Being forced to move in your 70s or 80s on 90 days’ notice may not be a good risk to take. 

    One solution you may not have considered is borrowing against your debt-free condo. You can apply for a mortgage or home-equity line of credit based on your income and qualifying ratios. A line of credit may be more flexible than a lump-sum mortgage deposited to your bank account, because you can withdraw funds as needed and pay interest as you borrow. 

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    Jason Heath, CFP

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  • Taxes halved their inheritance. Could anything be done? – MoneySense

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    It is a story about two young adults outraged by the amount of wealth lost to taxes—$659,000—when their parents, in their early 60s, both passed away within a year of each other. 

    I can sympathize with the children, thinking they were going to get this much money only to find they were getting substantially less. Without understanding why, I’m sure it was confusing and hurtful. Let’s walk through why the tax was so high and what if anything could have been done.

    Their father died, after their mother, in December, so he had a full year of income, which I’m assuming was $175,000. There was an RRSP worth $715,000, and I will assume capital gains on the cottage of $850,000. This combination resulted in taxes of about $659,000.  

    Hard to fix after the fact

    What could they have done to lower the amount of tax? In this case, when death is sudden, there is not much you can do. The father’s salary is taxable and there is no getting around that.  

    The same goes for the RRSPs; there is no getting around the tax. The children were named as beneficiaries of the RRSPs, which saved probate fees, but you can’t transfer an RRSP to an adult child like you can a spouse. The funds are withdrawn and the full value goes to the children, but the estate must pay the tax on the value of the RRSP. Regardless, the children end up paying the tax. 

    It is possible to reduce the amount of capital gains paid by designating either the house or cottage as the primary residence and naming the property that has appreciated the least as the secondary property. If there is a bright side to capital gains tax, it is that 50% of your gain is tax-free, so on a $850,000 gain you only pay tax on $425,000.

    When you add it all up—salary $175,000, plus $715,000, plus $425,000 taxable capital gain—that is taxable income of $1,315,000 and tax of $659,000 or 50% of the total income.

    This is why it looks like the government took all their parents’ money. The children inherited the house and cottage and the only cash money they had to pay the taxes was the money from the RRSP. Out of $715,000, they were only left with about $56,000 between the two of them to cover the funeral, accounting, and legal fees, and to maintain the properties until one or both could be sold. 

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    The takeaway: plan for many outcomes

    I’m sure when their parents did their planning, if they did, they assumed they might live to age 90, drawing down on their RRSP/RRIF over time to minimize the tax. They may have sold their principal residence and moved to the cottage, designating it as the principal residence. This would have deferred—and, with inflation, shrunk—the capital gain. They may never have considered what the situation would look like if the unexpected happened.

    If they had, they may have considered purchasing life insurance. Life insurance is for “just in case” the unexpected happens. They could have purchased some term insurance with an option to convert to permanent insurance if taxes continued to be an estate issue. The insurance doesn’t minimize the tax, but it provides the children with tax-free money right away—money that gives them time to pause and think rather than feel under pressure to sell properties at a time that may not be opportune.

    This story serves as a good reminder that when doing your planning, consider what the picture may look like if the unexpected happens and then decide if you want to do anything about it. In this case the parents may have been aware, and understood the tax implications, if they both passed away early. Maybe they felt the children would just sell one or both properties and everything would be good. For the adult children this was unfamiliar territory with a big learning curve.  

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    About Allan Norman, MSc, CFP, CIM


    About Allan Norman, MSc, CFP, CIM

    With over 30 years as a financial planner, Allan is an associate portfolio manager at Aligned Capital Partners Inc., where he helps Canadians maintain their lifestyles, without fear of running out of money.

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    Allan Norman, MSc, CFP, CIM

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  • Giorgio Armani’s will revealed

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    Details of the will of late fashion designer Giorgio Armani have been revealed which set out plans for the succession of his company, Reuters reports.

    The will instructs heirs to sell a 15% stake in the Italian fashion house within 18 months and later transfer an additional stake to the same buyer between three and five years after his death, or pursue an initial public offering, the news agency said, citing the will.

    Newsweek contacted the Armani Group by email seeking comment.

    Why It Matters

    According to Forbes, Armani had a net worth of $12.1 billion. At the cornerstone of his wealth is the Giorgio Armani fashion empire, which was founded in 1975. Before his death, he was both the CEO and sole shareholder of the company.

    Shortly before his death, Armani outlined the succession plan of his business during an interview with the Financial Times. He told the outlet, “My plans for succession consist of a gradual transition of the responsibilities that I have always handled to those closest to me … such as Leo Dell’Orco, the members of my family, and the entire working team.”

    Italian fashion designer Giorgio Armani acknowledges applause during the presentation of Emporio Armani’s Fall-Winter 2023-2024 Women’s collection on February 23, 2023 during the Fashion Week in Milan.

    Marco BERTORELLO/Getty Images

    What To Know

    Armani, a visionary designer who transformed global fashion with his understated elegance and business savvy, died on September 4, at the age of 91, his company said.

    Armani, who was very private about his personal life, had no children.
    The Armani business, which generates more than 2.3 billion euros ($2.7 billion) a year, had expanded into music, sport, and Italian luxury hotels. He was the owner of the Italian basketball club Olimpia Milano, had investments in luxury hotels, real estate holdings, and was the owner of a 200-foot yacht.

    Armani noted in the interview with the Financial Times that he wanted his succession to be “organic,” and “not a moment of rupture.”

    Reuters reported that the will stipulates that a 15 percent stake should be transferred within 18 months and then an additional 30 percent to 54.9 percent should be transferred to the same buyer between three and five years after his death.

    Alternatively, an initial public offering should be pursued, Reuters reported, citing the will.

    The will also states that priority should be given to luxury giant LVMH, L’Oreal, EssilorLuxottica or other groups, Reuters reported, adding that heirs should consider other fashion and luxury companies with which Armani’s company has commercial ties for a sale.

    As Armani left behind no children to inherit the business, there had long been speculation about what the future of the Armani empire would look like after his passing. Back in 2016, Armani held a meeting to outline what would happen following his death, establishing new statutes for the group and dictating the principles that would define the future of the company.

    Beyond his family, his heirs will include his long-term collaborator and right-hand man, Pantaelo Dell’Orco, and a foundation. This foundation was established in 2016 and plays a significant role in the preservation of Armani’s legacy, following a model adopted by the luxury watchmaker Rolex. It is designed to protect the company.

    Dell’Orco has worked alongside Armani for over four decades and is currently the Armani Group’s head of men’s style.

    All of these people are part of the company’s board of directors, and, under the leadership of Armani’s sister Rosanna, have long been involved in the company’s team.

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  • Should you sell stocks you inherit? – MoneySense

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    How are stocks taxed when you inherit them? 

    When a spouse or common law partner is a beneficiary, assets can be transferred to them on a tax deferred basis. So, for this section, we will assume a non-spouse beneficiary. 

    For non-spouse beneficiaries, inheriting stocks usually triggers tax consequences at the estate level, not for the individual. The estate settles any taxes owed before distributing the after-tax proceeds to the heirs.

    A registered account like a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) is fully taxable based on the account value. The market value of the account on the date of death is considered income to the deceased. The tax is payable on their final tax return. Income or growth after that is taxable to the beneficiary:

    • If the estate is named as beneficiary, it will pay the incremental tax.
    • If an individual beneficiary is named, they will pay the tax on the post-death income or growth accrual. 

    A tax-free savings account (TFSA) is tax-free at death, but likewise, income or growth after that is taxable to the beneficiary (estate or individual).

    A non-registered account is subject to capital gains tax on death, with the market value minus the adjusted cost base of each stock resulting in a capital gain (or loss, if trading at a lower value). Once again, subsequent income is taxable. 

    Since a non-registered account cannot have a beneficiary, the resulting tax is borne by the estate. If a stock is sold for a capital gain, post-death growth is also taxable. But if a stock is transferred to a beneficiary as part of their inheritance without selling it, that does not trigger tax on the post-death growth. Instead, the recipient’s cost base for their future capital gains purposes would be the market value at the time of the death. 

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    Do you have to sell stocks you inherit? 

    Stocks are often sold to pay tax and estate costs, with the net cash proceeds transferred to the beneficiaries. An executor may sell all of the estate assets regardless to reduce the risk of the market values declining to prevent being responsible for the estate losing money. 

    However, the executor of the estate can choose to transfer assets in kind—or as is—to a beneficiary. This can include stocks that were owned previously by the deceased. 

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    As a result, a beneficiary can end up with a stock inheritance. 

    What to do with an inheritance of stocks

    The question then becomes whether to keep stocks if you can sell and transfer cash, or to transfer stocks in kind.

    From my perspective, inheriting an asset is unintentional. It is one thing to buy Canadian Pacific Railway shares on purpose but keeping them just because someone else bought them is questionable. 

    It is like inheriting someone’s clothes. If they fit and they are nice, maybe you will keep them. But if they are the wrong size and out-of-date, why wear them? Stocks need to be the right fit for your portfolio, and you should be careful about keeping them simply because you inherit them. 

    Should you keep the investments at the same financial institution?

    Some beneficiaries like to maintain continuity. This can include keeping the same investments in the same place. In some cases, with an investment advisor, and in other cases, in a self-directed account. 

    An advisor is obviously motivated to encourage the beneficiary to keep the account with them. If there is an existing relationship, this can be a good reason to maintain continuity—but if there is not, an investor should not just keep the account as is just because. They should decide consciously to maintain the relationship and interview the advisor just like they would if they were selecting a brand-new one. 

    And if the account is a self-directed account and the beneficiary has little to no investing experience, they should be careful about trying to step into the shoes of the deceased. Not everyone is meant to be a do-it-yourself investor. You are not obligated to make the same financial decisions as someone who left you a stock inheritance. 

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    Tax implications of selling stocks after you inherit them

    When you receive an inheritance of stocks, the market value upon the death of the deceased was already taxed. If the stocks were held in an RRSP, RRIF, or TFSA, the appreciation in the stocks until the time of transfer would also be taxed to the estate or beneficiary.

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    Jason Heath, CFP

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  • Helping your kids buy a home? Why a cash gift may be safer than co-signing – MoneySense

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    “The most important thing to understand about co-signers is that if there are four people on the mortgage, each of them is not responsible for 25%; each one of them is responsible for 100%,” said Ron Butler, principal broker at Butler Mortgage.

    Co-signing a mortgage can be a risky commitment

    At several major lenders in Canada, he noted that only one person listed on the mortgage agreement needs to sign for a renewal to take effect. “There could be four people on the mortgage. The bank will accept the sign-off of one single person to process the renewal, and once the renewal is processed, it’s all locked in for another five years,” he said.

    Butler said once you co-sign, it’s extremely difficult to remove yourself from the mortgage. “You should probably never co-sign, to be honest with you. Co-signing, guaranteeing mortgages, is fraught with danger,” he said.

    Butler recalls one incident that saw a mother have a “spectacular falling out” with her son after co-signing his mortgage, totalling over one million dollars, years earlier. “Now she absolutely wants off the mortgage. She does not want to have any financial ties to the son,” he said. When she tried to approach the bank to get out of the mortgage and told the lender she would not sign a renewal, she was informed that her son could renew the mortgage on his own, he said.

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    Early inheritance or cash gifts may be safer than co-signing

    While co-signing for a child’s mortgage is not as popular with the slowdown in the housing market, Butler said, it was an “epidemic” during the real estate frenzy of the early pandemic years when interest rates hit rock bottom.

    Leah Zlatkin, a licensed mortgage broker and LowestRates.ca expert, noted parents should consider the potential impact co-signing could have if they have multiple children who might need help to buy a home, leading to “family squabbles.” Co-signing for one child may affect the parent’s ability to help their other children in the same way, as there is only so much debt a person can take on.

    Instead of co-signing, Butler said providing a monetary gift or early inheritance may make more financial sense for parents looking to support their children’s real estate aspirations.

    “If you’re in the money and you wish to give an early inheritance, that is absolutely fine,” he said, adding that parents should know their own capacity to give.

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    Zlatkin said parents could opt to take out a home equity line of credit and gift that money to their kids or just provide a lump sum of cash. Regardless of the option they choose, she said more parents are opting for a gift than to co-sign because then the parents “don’t have to be liable for anything.”

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  • Unbelievable facts

    Unbelievable facts

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    Gordon Ramsay has chosen not to leave a large inheritance for his children, doesn’t allow them…

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  • Don’t squander your legacy – MoneySense

    Don’t squander your legacy – MoneySense

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    The essential guide to inheritance planning

    Neglecting to plan your inheritance is a bit like leaving your garden unattended for a few seasons. What starts as a minor oversight can quickly turn into a jungle of complications. Shockingly, two-thirds of Canadians haven’t put their estate plans in writing, according to a 2024 survey by IG Wealth Management, despite an expected $1 trillion in assets set to be transferred via inheritances in the next decade.

    When a significant sum of money lands in the lap of someone who didn’t earn it during their lifetime, it can lead to a host of challenges. Financial mismanagement, family discord and even legal battles can arise. Inheritors might feel overwhelmed, unsure of how to handle their sudden wealth, which leads to anxiety and poor financial decisions. As the saying goes, “Easy come, easy go.”

    The pitfalls of inadequate inheritance planning

    Without proper planning, wealth transfer can lead to several challenges for your heirs:

    1. Risk of fraud and exploitation: Inexperienced heirs can become targets for financial scams and exploitation.​​ Falling victim to such schemes can lead to significant financial losses, jeopardizing the inheritance intended to support their future.
    2. Family disputes: Ambiguous inheritance plans can cause significant conflicts among family members. Clear, well-documented plans are crucial in preventing misunderstandings and ensuring that wealth is distributed according to the benefactor’s wishes. 
    3. Tax Implications: Unplanned wealth transfers can incur substantial tax burdens, reducing the overall inheritance value. Strategic planning can help mitigate these taxes, preserving more wealth for the beneficiaries. Proper estate planning can save heirs from unexpected tax liabilities and ensure a smoother transfer process​.

    Key considerations for transferring wealth 

    To avoid these pitfalls and ensure a smooth wealth transfer, parents and grandparents should consider the following strategies:

    1. Clear communication: Talk openly with your children and grandchildren about your plans. Surprise inheritances can feel like a windfall, but they can also bring confusion and stress. A candid conversation ahead of time can prepare them mentally and emotionally for the responsibilities that come with managing wealth.
    2. Structured distribution: Rather than a lump-sum transfer, consider staggered distributions or trust funds. This method can help reduce the risk of financial mismanagement. Setting up a trust can ensure your heirs receive funds in a controlled manner, reducing the temptation to splurge.
    3. Education and financial literacy: Equip your heirs with the knowledge they need to manage their inheritance wisely. Financial literacy programs or meetings with a financial advisor can be invaluable. Well-informed individuals are more likely to make prudent financial decisions.​

    Supporting the next generation 

    When wealth is transferred, so too is the responsibility of managing it. Providing support for your heirs can make all the difference. Here are a few ideas to help:

    • Comprehensive guidance: Schedule regular meetings with a financial advisor to review the inheritance’s management and address any concerns or questions. This helps ensure that heirs stay on track with their financial goals​.
    • Recognize inheritance grief: “Inheritance grief” refers to the emotional and psychological challenges that heirs may experience when they receive a significant inheritance. It can manifest in various ways, including mourning the loss of the loved one and the changes that come with inheriting wealth. Emotional support, financial education and careful estate planning can help heirs navigate their feelings and responsibilities effectively.​​
    • Communicate the family financial plan: I know that I mentioned communication already, but I cannot overemphasize the importance of this! Develop a family financial strategy that includes goals for wealth management, charitable giving and future investments. This plan can serve as a road map for heirs to follow, promoting responsible financial behaviour and long-term planning.​ 

    Don’t leave it too late

    Inheritance planning might not be the most exciting topic, but it’s essential to ensure your legacy is preserved and appreciated by future generations. By addressing the challenges head-on and providing the necessary support while you are still capable of doing so, you can help your heirs navigate their inheritance with confidence and wisdom.

    Next time you’re tempted to delay those estate planning talks, remember this: a little planning now can prevent a whole lot of heartache later. And who knows? It might just be the most rewarding conversation you’ll ever have.

    More financial planning advice:




    About Debbie Stanley, TEP, MTI

    Debbie Stanley is an estate and trust professional, and CEO of the estate firm ETP Canada. She is a writer, speaker and regularly featured guest on Zoomer Radio.

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    Debbie Stanley, TEP, MTI

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  • A review and summary of Die with Zero and 4,000 Weeks – MoneySense

    A review and summary of Die with Zero and 4,000 Weeks – MoneySense

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    Die Broke is the book where I first encountered the colourful quip about how the last cheque you write should be to your undertaker, and it should bounce. In other words, the closer you can get to spending all your money just as you die, the less you have to fork over to Uncle Sam—and for us, the Canada Revenue Agency (CRA).

    Problem is, of course, that no one can accurately predict when they will die. As one unknown wag once remarked, retirement planning would be a cinch, if you just knew the day you’re dying.

    Summary of Die with Zero 

    So, it was of interest to me when an old college friend mentioned how much he enjoyed reading a book titled Die with Zero (HarperCollins, 2021), by Bill Perkins. My first reaction was that it sounded just like Die Broke, but I valued my friend’s opinion enough to check out a free copy on the Libby app and also on the paid book service Everand (formerly Scribd). The books have similar premises: there are trade-offs between time, money and health. Indeed, the Die with Zero subtitle is “Getting all you can from your money and your life.” 

    Essentially put, we exchange our time and life energy for money, which can therefore be viewed as a form of stored life energy. So, if you die with lots of money, you’ve in effect “wasted” some of your precious life energy. Similarly, if you encounter mobility issues or other afflictions in your 70s or 80s, you may not be able to travel and engage in many activities for which you had been saving up. The “money as life energy” idea is most memorably articulated in another classic book about financial independence: Your Money or Your Life (Penguin Random House, 2008). 

    But, what about the children? The issue of inheritance and leaving money to your heirs is deftly handled by Perkins in Die with Zero. The advice amounts to the old bromide that it’s “better to give with a warm hand than a cold one.” In other words, why not give them some of your money when they really need it, and you’re still healthy enough to enjoy their company, and presumably their gratitude.

    Die with Zero review

    After I read Die with Zero and started to write this column, I happened to chat with blogger Mark Seed of MyOwnAdvisor. Quite independently, he published a review of Die with Zero on the website Cashflows & Portfolios back in January 2024, along with a book giveaway promotion.

    “It was ‘OK’ in terms of content,” Mark told me in an email. “Some of the writing was not very good, but the premise is good: avoid hoarding money you could otherwise gift, spend, enjoy, etc.” The review starts with the following quote from Perkins: “The real golden years—the period of maximum potential enjoyment because we have the most health and wealth—mostly come before the traditional retirement age of 65.” The review further says that most of us know this intuitively, but “so many of us might be giving up years of semi-retirement or retirement enjoyment, only to find out we’ve saved too much or put off many valuable experiences for far too long.” The reviewers liken the main premise and the notion that it’s better to give now rather than later, but they also found it quite repetitive and lacking a real recipe for implementing the Die with Zero mantra. 

    Living the Die with Zero mantra

    If you read and absorb the thesis, you may find that the book changes your day-to-day behaviour. This happened to me recently, when my wife and I spent a few days in Fergus and Elora, Ont., for a birthday celebration. Initially, we booked a tiny room at a correspondingly tiny price. Once we checked in, we asked to look at a more spacious and luxurious room. We had both read Die with Zero and, having discussed the book, mutually decided to upgrade our room, despite the price being roughly double. It’s a small example, but it may just be the beginning for us. 

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    Jonathan Chevreau

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  • Cross-border estate planning: What should Canadian parents with U.S. beneficiaries do? – MoneySense

    Cross-border estate planning: What should Canadian parents with U.S. beneficiaries do? – MoneySense

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    The basics: U.S. estate tax for non-residents

    The U.S. imposes estate taxes on the worldwide estates of its citizens and residents. However, as a Canadian with no U.S. assets, you might initially assume that U.S. estate taxes do not apply to you. The catch here is that since your daughter is a U.S. permanent resident, her inheritance from your estate may generally not be taxable in the United States; however, there may be other tax and filing considerations to keep in mind. Let’s explore them together, Gail.

    U.S. estate tax thresholds and exemptions

    Currently, the U.S. federal estate tax exemption is quite high, sitting at $13.61 million per individual as of 2024. (All figures are in U.S. dollars.) This means that estates valued below this threshold are not subject to federal estate taxes. Assuming that your estate’s value is under $13.61 million, no federal estate tax would be due. For instance, if your Canadian estate is valued at $3 million, it is well below the $13.61-million U.S. federal estate tax exemption. Therefore, your daughter would not be liable for U.S. federal estate taxes on her inheritance.

    State estate taxes

    While the federal estate tax exemption is high, it’s important to consider that some U.S. states impose their own estate or inheritance taxes with lower exemption thresholds. The impact of these state taxes depends on where your daughter resides. As of 2024, the states of Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii and the District of Columbia impose estate taxes. This means residents of these states might face both federal and state estate taxes, depending on the total value of the assets.

    Estate tax thresholds in these states range from $1 million in Oregon to $13.61 million in Connecticut, and tax rates vary. I would recommend that your daughter check her state’s website for specific details on potential estate taxes, Gail.

    Financial management and currency exchange

    Managing a cross-border inheritance often means dealing with multiple currencies. When preparing your estate plan, Gail, you will want to keep in mind some key points that your future executor will come across when distributing your estate to your daughter:

    • Currency exchange rates: Fluctuations in exchange rates can affect the value of the inheritance when converting from Canadian to U.S. dollars. For instance, if the Canadian dollar weakens against the U.S. dollar between the time of inheritance and the time of transfer, the value of the inheritance in U.S. dollars could decrease.
    • Banking and investments: Transferring funds and managing investments across borders may incur extra fees and require dealing with different financial institutions. For example, transferring funds from a Canadian brokerage account to a U.S. account might involve transaction fees, wire fees and foreign exchange fees.

    Cross-border legal challenges

    Handling a will with cross-border implications requires careful legal navigation. Key issues include:

    • Recognition of wills: Canadian wills are generally recognized in the U.S., but differences in probate laws can complicate the process. Legal advice in both countries is often necessary. For instance, if a beneficiary wants to sell an inherited Canadian property, they may need to follow both Canadian and U.S. legal procedures.
    • Asset transfer: Transferring assets like real estate or investments across borders may involve additional legal and regulatory steps. For example, transferring a Canadian investment account to a U.S. beneficiary might require navigating both Canadian banking regulations and U.S. tax reporting requirements.

    Practical steps for cross-border estate planning

    To ensure a smooth transfer of your estate to your U.S. resident daughter, Gail, consider the following practical steps:

    1. Consult with experts: Engage with a cross-border estate planning specialist who understands both Canadian and U.S. tax laws. These professionals have the expertise needed to navigate the complex rules and regulations involved in cross-border inheritances. They can help ensure that your estate plan minimizes taxes, avoids legal pitfalls, and complies with the laws in both countries, making the transfer of your assets as smooth as possible.
    2. Update your will: Make sure your will is current and clearly outlines your wishes. Specify exactly how you want your assets to be distributed, and think about any cross-border issues that might come up. This will help ensure that everything goes according to your plans when the time comes.
    3. Consider trusts: Establishing a trust can be a smart way to manage and transfer your assets. A trust is a legal arrangement where a trustee holds and manages your assets for the benefit of your chosen beneficiaries. By setting up a trust, you can ensure that your estate is managed efficiently, tax-effectively and according to your precise wishes. Consulting with a cross-border estate planning specialist can help you determine the best trust structure for your situation.
    4. Stay informed: Tax laws and regulations can change frequently, impacting how your estate is taxed and managed. To maintain the effectiveness of your estate plan, schedule regular reviews with a cross-border estate planning specialist. This proactive approach ensures that your plan remains up-to-date, legally compliant and optimized for tax efficiency, ultimately protecting your legacy and providing peace of mind.

    How to ensure a smooth transfer of your estate

    As you can see, Gail, cross-border estate planning for Canadian parents with U.S. resident children involves navigating complex tax regulations and potential pitfalls. While your estate may be valued under the federal threshold and might not face U.S. federal estate taxes, there are state taxes and other considerations that could impact its final value. By consulting with experts, updating your will, considering trusts and staying informed, you can ensure a smooth and tax-efficient transfer of your estate to your daughter.

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    Debbie Stanley, TEP, MTI

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  • How to calculate the adjusted cost base of inherited property – MoneySense

    How to calculate the adjusted cost base of inherited property – MoneySense

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    When you inherit real estate, any accumulated tax, if applicable, is generally paid by the estate of the deceased. This is because when a taxpayer dies, they are deemed to have sold their assets on their date of death, and any tax payable is calculated on their final tax return.

    Property inherited from a spouse or common-law partner

    One exception is for real estate left to a surviving spouse or common-law partner. If you inherited this building from your spouse or common-law partner, Bill, it may not be the property’s 2003 value that you need to determine.

    By default, capital assets pass to a surviving spouse or common-law partner at their original cost, unless the executor of the deceased elects otherwise. In this case, you would declare any change in value between the original cost of the property and its fair market value at the time of sale. If the deceased taxpayer is in a low tax bracket in their year of death or has tax deductions or tax credits to claim, a value that is higher than the original cost may be reported.

    A capital asset’s original cost is referred to as the adjusted cost base (ACB), and it’s based on: the original acquisition price (typically the purchase price); acquisition costs (like land transfer tax for real estate); and adjustments over the years (like renovations for real estate or reinvested dividends for a stock).

    What to do when the adjusted cost base is unknown

    Assuming you did not inherit this property from your spouse or common-law partner, Bill, you would need to know the value of the property at the time you inherited it. It should be the fair market value of the property reported on the tax return of the person you inherited it from in 2003. If the building was their principal residence, it may not have been reported.

    Assuming you have no record of that value, you could estimate the value on your own. If that’s not easy to do, you can have a realtor look up sales of comparable buildings in the same area around 2003 to try to determine a value. A designated appraiser may be the professional best equipped to provide a valuation based on historical sales data, if it’s available. A formal valuation by the Canada Revenue Agency is an option, but it is not required for your tax filing.

    Don’t forget about renovations and rental income

    If you have done any renovations to the property since inheriting it, Bill, those renovations may have increased your ACB. Capital improvements are added to the original acquisition cost (the property’s value when you inherited it, in your case) to determine your tax cost in the year of sale.

    If the property was a rental property, you may have claimed capital cost allowance or depreciation to reduce the net rental income in some or all of the years you owned it. Those past tax deductions are recaptured in the year of sale and included in your income.

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    Jason Heath, CFP

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  • How to avoid or reduce probate fees in Ontario – MoneySense

    How to avoid or reduce probate fees in Ontario – MoneySense

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    What is Estate Administration Tax in Ontario?

    Estate Administration Tax, commonly known as probate fees, is a mandatory tax imposed by the Ontario provincial government. It is placed on the estate of a deceased individual and is calculated based on the fair market value of the deceased’s estate, including all assets, property and investments on the date of death. It’s important to note that Estate Administration Tax is only triggered and payable when the estate goes through the probate process, which is a legal procedure that happens in two circumstances.

    Firstly, it verifies and validates the last will and testament of a deceased individual in Ontario, ensuring authenticity of the will, and appointing an executor to manage the distribution of assets.

    Secondly, when an Ontario resident passes away without a will, probate is necessary to establish a legal executor for asset distribution. And it ensures that the process follows legal guidelines while safeguarding the interests of the beneficiaries.

    Calculating probate fees in Ontario

    The calculation of Estate Administration Tax in Ontario is relatively straightforward, and can be found on Ontario.ca, if you are looking to play around with the numbers yourself. Like marginal income tax brackets, the tax rate is determined by a tiered system that corresponds to the total value of the estate on the date of death. Here’s a breakdown of the current rates:

    Estates Valued Under $50,000

    If the estate’s total value is less than $50,000, no Estate Administration Tax is payable.

    Estates Valued Over $50,000

    Estates valued above $50,000 are subject to a tax rate of $15 per $1,000 or part thereof.

    For example, if an estate is valued at $200,000, the calculation would be as follows:
    The first $50,000: = $0
    The remaining $150,000: ($200,000-$50,000=$150,000) x $15 per $1,000 = $2,250

    So, the total estate administration tax for an estate valued at $200,000 would be $2,250.

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    Debbie Stanley

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  • Guy Fieri Says His Sons May Not Inherit His Fortune | Entrepreneur

    Guy Fieri Says His Sons May Not Inherit His Fortune | Entrepreneur

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    Celebrity chef Guy Fieri may have a net worth of $70 million, but that doesn’t mean his two sons will feast on his fortune after he dies.

    In an interview with Fox News, the Food Network’s highest-paid star and the man behind the Flavortown empire said that he told his sons, Hunter and Ryder, they would have to work hard for the money.

    “I’ve told them the same thing my dad told me. My dad says, ‘When I die, you can expect that I’m going to die broke, and you’re going to be paying for the funeral.’ And I told my boys, ‘None of this that we’ve been…that I’ve been building are you going to get unless you come and take it from me,’” Fiery said.

    Related: An Hermès Heir Wants to Give Half His $12 Billion Fortune to His Gardener—and Lawyers Are Going Nuts

    Instilling a strong work ethic

    Fieri’s comments may seem harsh, but they reinforce his firm belief in a strong work ethic. Nothing ever came easy to Fieri, and he expects the same for his kids. Before Fieri won “Food Network Star” in 2006, he worked for a car parts manufacturer. He catapulted to fame with shows like “Diners, Drive-Ins and Dives” due to his tireless pursuit of culinary perfection. The hair helped, too.

    While some might assume that the children of a TV star would have an easy path laid out for them, Fieri has set a high bar for his children, expecting them to pursue higher education fervently. Instead of giving his 16-year-old son, Ryder, a fancy sports car for his birthday, he gave him the family minivan.

    “I refuse to let him buy a car until he spends one year with no tickets, no accidents, driving the minivan,” Fieri told People.

    The tough love approach seems to be resonating. His oldest son, Hunter, 27, has a contract with Food Network, is a top salesman for the family wine brand, and is advancing towards his master’s degree at the University of Nevada (where his dad went).

    As for Ryder, he appreciates his father’s passion but wishes he’d turn down the heat a little.

    “My youngest son, Ryder, is a senior in high school getting ready to graduate, or you know, going to graduate in the spring,” Fieri said. “And he’s like, ‘Dad, this is so unfair. I haven’t even gone to college yet, and you’re already pushing that I’ve got to get an MBA? Can I just get through college?’”

    Related: Gift Deed Or Will: What Is the Best Way To Pass On Your Assets To Your Beloved?

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    Jonathan Small

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  • Hermès' Heir Wants to Give Half His $12 Billion Fortune to His Gardener | Entrepreneur

    Hermès' Heir Wants to Give Half His $12 Billion Fortune to His Gardener | Entrepreneur

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    It’s Succession meets Knives Out—only this Hollywood-like plot is real.

    Nicolas Puech, 80, the estranged Hermès heir, announced a bold plan to adopt his 51-year-old former gardener and handyman to bequeath him his $11 billion fortune. Puech is the grandson of the founder of the fashion giant and owns 5.7% of the company.

    According to the Swiss publication Tribune de Genève, the reclusive Peuch has little contact with his family. Single and childless, he considers the gardener (whose name has not been released) to be like kin. Not much else is known publicly about the gardener besides that he comes “from a modest Moroccan family” and has a Spanish wife and two children.

    Related: ‘Wolf in Cashmere’ Bernard Arnault Has a Cutthroat Reputation. In a ‘Succession’-Like Drama, He’s Eyeing His Replacement — and It Might Not Be Family.

    Reversal of fortune

    Previously, Peuch promised to hand over his money to his foundation. But earlier this year, he had a change of heart, sending a “handwritten note” to the foundation expressing his wishes for a new succession. Shockwaves ensued.

    With no direct heirs to his name, the billionaire may get away with his plan. But not without major legal hurdles. According to Tribune de Genève, adopting an adult child in Switzerland is complicated—add that the adoptee stands to earn billions, and it becomes a high-stakes battle.

    Bad blood

    This is not the first time Puech has clashed with his family. In 2014, he left Hermès board of directors after a hostile takeover bid by fashion rival LVMH. But he retained his shares, making him among the wealthiest individuals in Switzerland. He now lives in a mansion with 66 other inhabitants in La Fouly, according to El Pais.

    Hermès, now the third-largest publicly listed company in France worth an estimated $200 billion, is no stranger to the spotlight. Still, this latest development has taken center stage, evoking questions and curiosity about the future of this storied empire.

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    Jonathan Small

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  • Family legacy: How to pass along the family cottage—and 3 things to avoid – MoneySense

    Family legacy: How to pass along the family cottage—and 3 things to avoid – MoneySense

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    There’s no one-size-fits-all solution. “Planning has a lot of moving pieces, and it’s very important to get it right, and it’s very easy to get wrong,” says Peter Lillico, partner at Lillico Bazuk Galloway Halka Law firm in Peterborough, Ont. He is also a speaker at the Cottage Life shows. “Every family is unique, every cottage is unique, and every cottage succession is unique.” Here, he breaks down the common misconceptions Canadians have about estate planning around the family cottage.

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    Myths around cottage succession 

    Identifying any potential issues is the first step in navigating how to transition the family cottage effectively. Let’s look at some common misconceptions and the solutions that work.

    1. Assuming everybody will get along

    Many parents assume that their children and other family members will agree on how to use and maintain the cottage. This is a mistake because it overlooks the potential for conflicts and differing expectations.

    For example, take a family with two adult children, one living in Alberta and the other in Ontario. The one who lives close to the cottage in Ontario may use the property quite often. However, if the expenses are split 50/50 between both, this can lead to arguments. Lillico says: “There are cottage sharing agreements that can, and should, be worked out beforehand.” Parents (and/or their adult children, frankly) can create agreements that outline rules around care and expenses, and whether they should be shared equally or allocated in proportion to usage, or whatever the family wants. 

    A cottage sharing agreement is a binding document that passes the ownership and control from one generation to the next. It doesn’t just include estate planning details, but also future rules around the cottage. It contains structured instructions for financial responsibilities, sharing usage concerns, division of ongoing labour and maintenance, and even dispute resolution. Lillico explains a real estate lawyer can help with the cottage sharing agreement, as well as “a worksheet that helps [parents] to consider how well suited the kids are for cottage ownership.” 

    2. Underestimating capital gains tax

    Some Canadian cottage owners may believe that succession of the property will leave their children with a valuable asset, but many underestimate the costs of capital gains tax and unforeseen maintenance expenses.

    As real estate prices increased over the years, the family cottage may have risen in value significantly, especially if it was purchased decades ago. This leaves owners facing capital gains tax when they sell the property. Capital gains tax is levied on the profit of the cottage, which is considered a capital asset. 

    Capital gains and losses are calculated based on the difference between the selling price and the original purchase price, adjusted for certain eligible expenses like renovations and improvements. (So, keep those receipts to lower the gain!) 

    A loss can be used to reduce owed taxes on a personal income tax return. A gain, however, is taxed, but not all of it. The taxable portion of a gain is divided in half, and that amount is added to the individual’s overall income and taxed according to their income tax bracket.

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    Debbie Stanley

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