Probate is getting UGLIER …as of Jan. 1 st

1. Probate is getting UGLIER…as of Jan. 1st What can you do to avoid it? There are solutions….. Jason Laidler, CFP thepipingplanner@rogers.com

2. Changes to Probate… Significant changes introduced: • Applications filed after 2012 will be filed with Ministry of Revenue and will require the disclosure of new “prescribed information” about the deceased and his/her assets • Regulations not yet released in this regard • Compliance measures are being stepped up (effective May 12, 2011 – date legislation received Royal Assent)

3. Changes to Probate… Certain provisions of Ontario’s Retail Sales Tax Act will apply • New audit and verification powers given to Minister of Revenue • Will govern procedures for assessments and reassessments, objections and appeals, administration and enforcement • Probate fees can be assessed or reassessed for a four-year period starting with the date after the tax is due (i.e., date application is made or court)

4. Changes to Probate… Certain provisions of Ontario’s Retail Sales Tax Act are expected to apply – cont’d: • No statute of limitations if there is misrepresentation or fraud, or failure to comply • Punishable by a fine of $1,000 up to twice the amount of the tax payable and/or imprisonment of up to 2 years

5. Changes to Probate… What this means: • Delays, more costs and more uncertainty • Value of assets for probate purposes needs to be supportable • Extended need for valuations • Not clear if current affidavit process (where values are uncertain) will continue in effect

6. Changes to Probate… What this means – cont’d : • Executor does not have comfort of a “clearance certificate”, as is the case with CRA and income tax liabilities • Is there the potential for personal liability if estate distributed and additional probate fees are owing? • Impact on use of multiple wills is not known • Advisors can add value by doing the appropriate planning (including using designations in insurance contracts….and/or seg funds)

7. TECHNIQUES FOR EXCLUDINGASSETS FROM PROBATE

8. Techniques for Excluding Assets from Probate… Designations made in insurance contracts: • Life insurance & critical illness • Annuities (including Term Funds) • Segregated Funds!!!!....100% capital guarantee! • For payouts to beneficiaries, consider use of Annuity Settlement Option (ASO) in appropriate circumstances, where offered by an insurer

9. Techniques for Excluding Assets from Probate… Other techniques include: • Joint Tenant with Rights of Survivorship (JTWROS) (joint tenancy)* • Alter ego and joint partner trusts • Other appropriately structured trusts, including insurance trusts

10. Techniques for Excluding Assets from Probate… • Care should be taken when transferring assets to joint tenancy • Careful planning is key so as to avoid exposing assets to costly legal disputes among family members and inappropriate estate distribution • Need to consider implications of 2007 Supreme Court of Canada cases (Pecore v Pecoreand Saylor v Madsen Estate) • Cases examined presumption of resulting trust and presumption of advancement • Documentation evidencing intention is key and legal advice should be sought

11. Techniques for Excluding Assets from Probate… Other considerations with transfers to joint tenancy: • Possible Income tax implications • Disposition for tax purposes • Application of attribution rules • Loss of control over asset • Cannot take back asset • Cannot sell asset ….like Mark’s client’s house! • Exposing assets to creditors • Inability to have property become asset of a testamentary trust • Inappropriate portfolio risks

12. Thank you…… Questions?..... www.avoidprobate.ca