March 13, 2014 – Personal income Tax 1. Minimizing income taxes and other taxes or “probate fees” payable on death. 2. Ensuring liquidity to pay taxes at death, for example, with life insurance, or by paying capital gains tax with instalments over ten years. 3. Providing an orderly transfer of assets to the next generation. 4. Delaying taxes on assets transferred to your spouse. 5. Maintaining control and management over assets transferred. 6. Protecting assets from creditors. 7. Providing income to meet retirement needs. 8. Maximizing after-tax income if disabled and authorizing someone to act on your behalf.

What is an “estate freeze”? The purpose of estate freezing is to freeze the value of your growing assets at their current market value, so that your tax liability is established before your death, and future growth gets transferred to the next generation. You can still maintain control over the assets transferred, and receive retirement income from the assets. What is “probate”? Upon your death, your estate in Ontario may require probate, which is necessary only if third parties require confirmation that your executor has the authority to deal with your assets. Examples of assets that require probate in Ontario are real estate in Ontario and publicly traded securities. However, it only takes one asset requiring probate to make all assets governed by the same will subject to probate fees. Assets with designated beneficiaries such as life insurance, RRSPs/RRIFs, pensions, and tax-free savings accounts do not require probate. Assets held in joint ownership which pass by survivorship, and assets held in a trust, do not require probate. What is a “trust”? A trust is a relationship that is established when a person (the “settlor”) transfers property to someone (the “trustee”) for the benefit of persons (the “beneficiaries”). The uses of trusts in estate planning have both income tax and non-tax advantages, including income splitting, asset protection from creditors, and control & management of the assets through the trustee. Notice to Reader Dean Constand C.G.A. publishes this newsletter for information purposes only. Feel free to distribute to colleagues and friends. Although the material has been carefully prepared, it is not a substitute for professional advice.