Errol Tenenbaum from Robins Appleby LLP discusses a meme making the rounds about living trusts
This is Globe Advisor ’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you canPersonal finance memes are common on social media. One from the U.S. making the rounds is about eschewing a will and placing all assets in a revocable trust as the best way to eliminate probate on an estate.
People want to avoid probate. In Ontario, on every million dollars of assets after the first $50,000, that means paying 1.5 per cent or $15,000 in estate administration taxes, and that can add up quickly. But ultimately, the planning for a living trust has to match the individual’s needs. For the masses, it’s just too expensive and cumbersome.You have to transfer all the ownership to the trust.
It often doesn’t make sense for even the ultra high-net-worth . There could be immediate tax consequences when transferring the assets, depending on the type of trust. Do they want to trigger a capital gain today, especially with the increased inclusion rate? Do they want to pay tax at the highest rate of over 35 per cent in Ontario today to save 1.5 percent in 20 to 30 years?
For life insurance … without a designation, the estate is the designated beneficiary and would be subject to probate.
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