THE IMPORTANCE OF WILLS

Many people do not like to plan their demise but a will is an important document which should be addressed. If you do not have a will, your family may need to apply to the courts to get your assets. Your assets may not be distributed in the way which you had hoped or planned but never documented. Many people look for the cheapest rates to have a will prepared but do those wills do what the person wants? If you are a business owner or have many different assets, it is worth while to plan your succession. Gary R Landa, CA Professional Corporation can help you plan your will. A lawyer should be the one who prepares the will. Many lawyers do not explain the selections that you have made and the implications that arise when you pick that item. Gary Landa and his team can explain those to you. Remember, there is no right and wrong decision, the will is what you want to happen. In many cases, I have seen the wording in the will does not provide the results that the person was anticipating.

SUCCESSION PLANNING

The baby boomer generation is getting older and many are starting to thinking about retirement.

Do you own your own business? Are you incorporated or unincorporated? Do you have a family member who will be taking over the business? If you do not have a family member, do you have a key employee who wants to buy the business? Can that employee afford your business or do you need to plan and sell him/her a portion of the business over a number of years?

If you want to expand your business, are you about to invest additional capital and borrow from the bank to finance the expansion? Do you think that it will take say 5 years for the expansion to be successful and does this co-incide with the time that you plan to retire? If you are planning to sell your business in 5 years you will not see the purchase price reflect the additional capital and time that you spent to build the business over the last 5 years if you are just starting to see the rewards. Business valuation is based on what you have done historically in the past and investors often are not willing to pay for future growth if it is unproven.

Gary R Landa, CA Professional Corporation can assist you in developing your succession planning strategies.

WHAT IS INVOLVED IN A WILL?

If you are a business owner, you should consider having two wills instead of one in order to minimize probate fees. A key decision, which needs to be made, is the executor and the trustee if a trust is created on your death. If you are leaving assets to a minor, how old is the minor and what age will they be when they receive their inheritance? If the child is 1 years old now and they will not receive anything until they are 30 years old, will your executor/trustee be alive in 29 years time? It may not be a good choice to pick a person who is 70 years old today to be your executor, the likelihood that they will be alive or in sound mind in 29 years in this example is slim. If your will does not allow for a change in executors, who will look after your estate for those 29 years?

PROBATE FEES

Effective January 1, 2015, the probate laws in Ontario changed. An executor who applies for a Certificated of Appointment of Estate Trustee (“Probate Certificate”) will be required to file an “Estate Information Return” within 90 days after the certificate is issued. Detailed Estate Information is required to be filed within 90 days with details of how the estate value was determined. The Minister of Finance now can audit your information for up to 4 years after receiving the Probate Certificate. If the Minister determines through audit that the estate values were understated, the Minister can issue an assessment or reassessment. Executors, who fail to file returns as required or make false or misleading statements, can be liable for penalties and/or imprisonment. In the past, you could wind up an estate within 1 to 2 years after the person passed away but under the new laws, that will now increase to between 4 and 5 years, if the assets of the estate need to be probated. The implications for now being an executor are very different under the new laws.