# Sensitive subject and I need plenty of advise.



## marina628 (Dec 14, 2010)

My brother has Stage 4 cancer and he is father to a 16 year old daughter.He has been divorced 13 years and pays child support to ex.He is putting his affairs in order and his ex has agree to take lump sum payment just so he can settle things with her about the child support.
There is no love between these two and he has told me as long as his daughter is under her roof he does not want her to have any of his money.He wants to leave me everything to pass on to her when she is older.I am not sure if this is the best situation and he does not want to set up a trust.He wants me to pay for all the major things in her life and then when she is When 30 pass it all to her.This is all investments outside registered accounts and a significant life policy.We will do some formal docs with a lawyer in a couple weeks but wondering if you have any advise for me.He has also left me an RSP which is subject to income tax how do i deal with this ?


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## houska (Feb 6, 2010)

My sympathies on a tricky situation.

I don't know your family's relationships, but based on what you write, I'm sorry, but the proposed approach sounds like a recipe for disaster. The conditions of "no money while under her mother's roof" and "only get the whole thing when 30" seem ripe for building a lot of resentment in your niece, with or without her mother's encouragement. Prepare for years of explicit or implicit pressure to deviate from the informal conditions. I would really encourage your brother to either give his daughter full control much earlier - to minimize the time of the interim arrangement and not allow her to be resentful, just to become an adult - or if he is hell-bent on age 30, to set up a proper trust fund. It will make it much easier to sustain a friendly, familial relationship with your niece.

Apologies if I misunderstood.


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## Four Pillars (Apr 5, 2009)

I'm so sorry about your brother. 

I'm glad he is making the effort to put his affairs in order.

I think he needs a proper trust since he doesn't want to give the money to his daughter at a young age. I agree with houska - giving it to you can cause issues (although it could also work out fine). Both the daughter and ex might do a lot of leaning on you to free up more $$. Hopefully the legal beavers will weigh in on this.

30 is too old to take over the $$. 

Slight aside - Based on my own driving experience, I would love to prevent my son from driving a moter vehicle until he is well into his thirties. However, that is not reality. Sometimes you have deal with things happening that are not on your preferred schedule.

You can't rule from the grave - if he thinks the money will hurt her at a young age, he should just give her an amount she can handle and then give the rest to someone else.


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## marina628 (Dec 14, 2010)

she would have about $25,000 a year starting at age 18 School paid for with fully funded RESP ,more or less worried about screw me up with taxes.


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## Berubeland (Sep 6, 2009)

I can't see this ending very well. What an awful position for your brother to put you in. While it's horrible to have to put your foot down with someone who is dying if he wants his wishes granted he has to go through the proper channels. 

1- Tax Implications for you
2 - What happens if something happens to you in the next years, then your heirs will be charged with making sure these possible comingled funds get sent to the right person at the right time. 
3- Tax implications for your heirs as well

Time for him to bury the hatchet.


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## marina628 (Dec 14, 2010)

Little bit difficult for him and the ex to work on this together ,not going to go through their history on a forum but there was fraud of over $100,000 committed by the ex wife including $30,000 she stole from my dad who has same name as my brother.She thought she was taking my brothers money which in her eyes made it ok.If she is left to oversee this money my niece will have nothing .But here is the thing he is leaving everything to me ,money his ex does not even know he has so not like she can come after me or even my niece but at same time I do not want to receive his rsp and have to pay taxes.I am considering asking him to just cash it all in himself and let the estate pay the taxes on it.


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## fraser (May 15, 2010)

My sympathies.

The very best advice that I can give you is to immediately seek out proper advice. That implies a lawyer with a great deal of experience in the wills and estates practice area and a competent tax accountant. The former may be able to point you in the direction, and work in concert with, the accountant. Yes, this advice and professional direction will cost money but the focus should be on the benefit that your niece will hopefully realize-along with meeting your brother's wishes/direction.

You only have one shot at this and it has to be done properly. I am no expert in either, but we have engaged those professionals (though not in your province) in the past to assist in our affairs. We were also made aware of others who, in all good conscience, did the same but followed advice that turned out to be less than ideal. Don't delay and I hope that you can attain the goal.


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## Charlie (May 20, 2011)

This is the kind of situation for which trusts were intended. Not only would a trust allow him to decide when and how his daughter gets his funds, there are significant tax advantages involved (the trust will be taxed at the full graduated rates rather than the income being added to your other income at your higher rates). You can be the trustee (if you're willing), and costs to maintain should be minimal. (just an annual trust return which shouldn't cost much and the cost to manage the funds which will be no different than if you managed them in your name). His daughter (and by extension his ex) will not have custody or access to the funds. If something happens to you before daughter gets the funds, she's still protected.

The RRSP will be taxed in his name anyways as it's deemed disposed on his death. If you're the beneficiary you get the funds. Your tax rate is irrelevant for this as it's taxed on his final return at his rates. The will should address whether the tax is paid by your share of the inheritance (otherwise you get the full RRSP, and his estate pays the tax). There are some provisions allowing a transfer of RRSP to minor kids -- don't remember the details, but something else to look into.

I'm not too sure what happens in Ontario regarding challenging wills. But if mom sees all the funds went to sister instead of daughter, there may be an issue. Again, something to talk over with the lawyer (and something the trust addresses -- at least in BC).

Basically, on death, his estate should go into a trust for the benefit of his daughter -- she to receive money at whatever age he deems, with you as trustee to manage the funds at your discretion -- or something like that. I know he doesn't want a trust -- but it's really not that complicated and likely addresses what he wants to do better then anything else, and also may address potential pitfalls of the plan he's currently considering. The trust can be created through the will, and doesn't come to be until he dies. In asking you to 'hold' the money for her until she's 30, he's essentially asked you to hold it 'in trust' without any of the protections or advantages a formal trust would have.

So very sorry to hear of this situation. As fraser noted, you need to talk this over with a lawyer who does this stuff. Make sure the lawyer you work with fully understands the tax angle too.


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## Charlie (May 20, 2011)

in case my above rambling post wasn't clear, the ex doesn't need to be involved in any of this if he goes the trust route or be made aware of how much money he had. And the trust can have a provision to pay for certain expenses before the age she gets the money.

FWIW I don't think 30 is too old. I recently worked with an estate that gave a bit of money at 25 and the balance at 35. He wanted the kids to be 'more established' before getting a windfall. Personal choice. Most people are much older by the time they get an inheritance. And this bit, of course, is none of our business...totally up to him...


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## MoneyGal (Apr 24, 2009)

What Charlie said. Also, if brother won't implement a trust, cannot Marina implement a trust herself with the willed funds?


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## Nemo2 (Mar 1, 2012)

Personally I'd suggest an arm's length 'solution' through an impartial legal authority unable to be subjected to family guilt trips and/or manipulation.

Paying for a lawyer to administer some kind of pre-specified trust will involve costs, certainly, but it's better than the likelihood of a lifetime's animosity between the niece and the OP.


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## Maybe Later (Feb 19, 2011)

I agree with the Trust. I encountered a very dissimilar situation, but with similar issues.

When my wife and I wanted to update our will we discussed leaving a large amount of our estate to my sister to raise our children. In this case we trust her and my BIL implicitly and we wanted the whole family to have access to whatever $$ available. I have no doubt that my children and my nephews would be instant siblings and should my sister need to expand the house, renovate, buy a new car, whatever they needed, we wanted them to feel that the money was their to meet their family needs.

Our lawyer made very good arguments and examples for setting up a trust administered by my sister. In short, our children are protected in the event of something unfortunate that would happen to their family after we passed away. In the end it was slightly more complicated than we initially envisioned, but accomplished our goals. Please feel free to PM for more detail, if that would help.

My sympathies to your entire family. I'm sorry that this is necessary for you to have to even consider.


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## caricole (Mar 12, 2012)

A few technical points to help

RRSP is taxed in the hands of the deceased in his FINAL déclaration for the year of death

All taxes for the deceased are (subtracted) paid by the estate

RRSP transfer to minor kids is not possible in this case, transfer can only be done to minor kids of which YOUR ARE THE LEGAL GARDIAN

If a minor obtains a sum of money, insurance, inheritance or the money is bequested to her, a family councel is set up to désignate a LEGAL GARDIAN, in this case probably the mother to oversee the use of this money. It will be up to the trustee to keep control of any money transfered to the minor up till she reaches 18

The deed of trust should clearly spell out the amounts of money and the timing and purpose for any futur transfer to the daughter

The trust will pay incometaxes on any money in the trust and issue T3 to any benificiaries...in this case, the daughter could be required to start to file incometaxes at the age of 16-17

Are there any other beneficiairies other than marina and the 16 year old doughter ?

A good talk between Daddy and his daughter of how things are set up for her good and future...without mentioning Mama or any reason that led to the split...she will make her own judgement over the later years...at 16, they a no kids anymore

Definitly a trust and a good set-up thrue a laywer or public notary wit a proper will

As long as there is life, there is HOPE

my opinion


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## kcowan (Jul 1, 2010)

Sorry to hear about the sad situation, Marina. I agree with those that suggest a trust. It makes sense on all levels but especially on the level of taxes it will incur.

You can do it. The taxes will likely be higher and the opportunity for the ex to challenge it as well. But do whatever you can get your brother to agree with. And you can set the money in trust for the daughter after he dies as well.


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## ijustttesting (Jun 3, 2011)

Why don't use the money to buy her some rental units and not allow her to sell unless certain monetary condition meet? :rolleyes2:


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## marina628 (Dec 14, 2010)

Thanks for all advise , We went to see a lawyer who is a friend of mine yesterday.Because I am beneficiary with his daughter I have removed myself completely of this situation with exception to being here to accept responsibility for his medical decisions.
Actually my brother has good insurance in that they give 50% of value in advance as a loan if you have terminal illness so he will be filing papers to get that 50% out this week.
We had a good talk to his daughter last night and again this morning and he explained to her that he has enough to care for her future and he wants her to be careful with her money.She knows the history between her parents and she loves her parents equally ,she has spent every summer with her father since she was 4 years old so they have a very close relationship.
The lawyer recommended he not make any agreement with ex as she is only entitled to 17 months child support and probably my brother will live 10-12 months longer.We have set up a trust that will start upon my brother's death and it will continue to pay the child support and on the daughter's 18th birthday the funds will be distributed to her.I am sure the ex will be fuming but reality is my niece is very mature for her age. I am going through much stress over my brother's health and I do not need or want extra stress managing money.We changed it so my niece will get everything at age 24 ,by that time she will be done school probably have her first job and already on her own.
Please do not take life for granted and take the time to tell people you love that you appreciate them , we never know how much time we have together.

Marina


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## MoneyGal (Apr 24, 2009)

Marina. A friend of mine is dying from cancer. It is amazing to be able to see life through her perspective. Today she was telling me that she phoned Sirius to cancel her subscription (although she loves it) because she isn't really driving any more. They asked her, "do you want us to put your account on hold for eight months?" and she had to say, "I don't think I'll be alive in eight months, and I don't want to give the people settling my estate any more stuff to handle, so I just want to cancel it today."


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## kcowan (Jul 1, 2010)

A former financial advisor (really just a great salesman) got throat cancer that had metasticized into his lungs. His friends held a going away party for him called "49 and Holding". He got to say goodbye to everyone and made a heartfelt speech that was posted on youtube. A class act to the end.


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## realist (Apr 8, 2011)

Sounds like you have reached a reasonable solution. Good luck moving forward.


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