# Tax avoidance - the best way



## Kbba (Oct 11, 2012)

My grandmother sold her house and the closing date is coming up. 
She's asking me to find out the best investment and/or best way to avoid having to pay taxes if the money were to say sit in a bank account.

Would gifting it to her 4 grandchildren be best? Co-sign some kind of saving account etc?

Thanks for any input.


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## Zipper (Nov 18, 2015)

You sound a little too eager.

She should not be co-signing anything.


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## carverman (Nov 8, 2010)

It sound like the beneficiaries of grandmother's estate are trying to get the proceeds of her estate by having her "gift" the proceeds before she is even gone, to avoid her estate paying probate fees.
Probate fees are calculated on the value of Grandmothers estate at time of death.
under $50,000 there is a minimum probate fee tax, but above that it rises steeply.

She could just distribute the proceeds of her estate directly by giving them small amounts over time, each a gift under $10,000. Once the money is deposited in a joint account held by Grandmother/beneficiary,
there will still be tax to pay on the interest earned. 

Who is going to pay that to the gov't?


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## OnlyMyOpinion (Sep 1, 2013)

Kbba, If this is your Grandma's principal residence, she will not pay any tax on its increased value. 

You shouldn't be calling this tax avoidance - you are not trying to illegally avoid taxes (I hope), just plan efficiently.

If she was to have the proceeds deposited into her chequing account (that pays no interest) then the money will not generate any income so she will not pay additional taxes. The problem is that the purchasing power of the money will decrease over the years as the cost of living increases, so this is not a good longer term plan.

Does she have a tax free saving account (TFSA) already? If she doesn't then she should open one. In it she could deposit $52,000 if she has never had one before. She could open a simple bank TFSA and keep it in a savings-type deposit or purchase a 'ladder' of GIC's in it that will mature over the next 1,2,3,4 and 5 years. The interest she earns in her TSFA is never taxed. 
Make sure she understands the rules of TFSA's though - there are rules around putting money back in that you have taken out, and there are $ penalties if you mess up. Don't think of this as an account you can put money in and out of frequently like a regular savings account - think of it as one you will deposit and/or take money out of once a year as needed. 
She can name a beneficiary or beneficiaries to the TFSA (unless she is in Quebec) so the money goes to them on her passing (rather than through her will).

If she has no need for the money - and here she needs to be very sure, without influence by you or others who might benefit - then yes, she could simply gift it to whoever she wants and the money and future earnings becomes theirs - if they are 18 (or 19 depending on province) or older. 
If they are under 18 then it gets more complicated. Many of us have used 'in trust' accounts but read the many cautions about them here: https://retirehappy.ca/use-caution-with-in-trust-accounts-for/. This includes the fact that any income in-trust accounts earn has to be attributed back to the one that put the money in - your Grandma. This would apply to a joint account as well - if she contributed the money then the interest earned by the account has to be claimed by her.

P.S. I see looking at your other thrreads that you recently sold your house(?) - how did that go?

P.P.S. I also see that your Grandma was considering liquidating and withdrawing $100k earlier this year: _My grandmother has some investments at the moment and she'd like to withdraw because of family drama BS... what/where would be the best place to put her roughly $100k in investments, something she could have access to, but at the same time, not too heavily taxed. Is there such a thing? Or gifting? _ - how did that sort itself out? It sounds like your Grandma had a very busy 2016.
I hope 2017 goes well for both of you.


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## AltaRed (Jun 8, 2009)

Tax avoidance where possible, e.g. a TFSA, up to contributory limits is a fantastic vehicle as OMO says. But I am disturbed at anyone who wants to avoid (avoid is legit, evade is not) paying any taxes on investment income. If someone is paying income tax on their investment income, that is a good thing. It means they are making money on their investments. What a concept!

I am leery of anyone looking to open a joint bank or investement account of any kind with an elderly person. That is a very tempting recipe for elder abuse, i.e. robbing that elder blind, using the contents of the account as collateral, making the contents of the account a seizeable asset in event of bad debt, etc. Financial insitutions (in my opinion) should be required by regulatory authorities to red flag such accounts to see who might be 'attaching' or 'using' those accounts for personal reasons. Having a joint account does NOT escape income taxation... The proceeds of any joint account investment income are still attributable back to the person who made the contribution in the first place, i.e. in this case Grandma.

Too many elders* in my opinion have a very unhealthy attitude towards paying income tax and that becomes their downfall and vulnerability. Have her put her funds into a GIC ladder to maximize/optimize her interest income and be happy paying income tax at her marginal tax rate. Unless she is very wealthy with a high income tax bill already, chances are her tax rate is minimal anyway.

* Case in point: I had a father-in-law back in the 80's and 90's who had sold his farm and after paying for a retirement bungalow in town, put the rest of the proceeds into a bank savings passbook account earning pathetic interest. I tried to show him how he could make 5-10 times as much money by putting it in a 5 year GIC ladder. He refused because he would be paying more income tax on that interest....even though the end result would have really been a lot more after tax income in his pocket. I gave up banging my head against the wall.


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## carverman (Nov 8, 2010)

AltaRed said:


> Tax avoidance where possible, e.g. a TFSA, up to contributory limits is a fantastic vehicle as OMO says. But I am disturbed at anyone who wants to avoid (avoid is legit, evade is not) paying any taxes on investment income. If someone is paying income tax on their investment income, that is a good thing. It means they are making money on their investments. What a concept!


Depending on Grandmas age, the TFSA may be a good vehicle up to her maximum contribution limit *BUT* if Grandma passes, that account (if it's just in HER name alone) WILL BE FROZEN by the bank,until released by Probate. So in that instance, probate fees will have to be paid on Grandma's estate to release those accounts for distribution by the executor/adminstrator of her estate. 



> I am leery of anyone looking to open a joint bank or investement account of any kind with an elderly person. That is a very tempting recipe for elder abuse, i.e. robbing that elder blind, using the contents of the account as collateral, making the contents of the account a seizeable asset in event of bad debt, etc. Financial insitutions (in my opinion) should be required by regulatory authorities to red flag such accounts to see who might be 'attaching' or 'using' those accounts for personal reasons. Having a joint account does NOT escape income taxation... The proceeds of any joint account investment income are still attributable back to the person who made the contribution in the first place, i.e. in this case Grandma.


Yes, joint accounts with an elder and a beneficiary could lead to possible abuse, but if the account is set up so that Grandma has to also authorize any funds withdrawn, it may have some merit..provided Grandma doesn't have alzeheimers making her incapacitated to make those decisions. 
The withdrawal checks on a savings account, can be made up that both signatures are required to cash the check, but
of course it doesn't protect against forgery.

it really depends on whether Grandma will need those funds to have a retirement home or caregiver(s) to look after her when she can no longer live independently, in that case a trust account with a relative needs to be set up.



> Too many elders* in my opinion have a very unhealthy attitude towards paying income tax and that becomes their downfall and vulnerability. Have her put her funds into a GIC ladder to maximize/optimize her interest income and be happy paying income tax at her marginal tax rate. Unless she is very wealthy with a high income tax bill already, chances are her tax rate is minimal anyway.


She's not alone, I hate paying taxes too, but I have file with the taxes paid to claim my tax credits. 
I invested $50k in one of those GIC ladders back in 2013, the last one ($10K) matures in early 2019.. now provided I live that long, I may get to use it.

While the GIC ladder pays a bit more than the pittance interest (0.8%) on normal savings, you end up
*locking up those funds for up to 5 years*. Now if Grandma needs some of the funds in the meantime, she can't get at those funds, only the ones that mature each year.

If she passes in 5 years time, those funds are added to her estate..and yes...then you have to pay probate
taxes on those funds...no wonder us seniors hate paying taxes...the gov't will reach into our graves to collect 13% HST on funeral expenses!.. "Death and taxes"..you cannot avoid them in life, but at least we have some peace from gov'ts after that for eternity.


If Grandma lives in Ontario..here is info on the latest probate fees (taxes). 

So as I mentioned, if Grandma gifts some of her liquidated estate prior to her death, there is no taxes to pay on gifts.
But the dollar amount has to be under $10,000 to avoid the government FINTRAC from getting involved on any cash transactions over $10,000. 

BTW, it is legal to bring up to $10,000 into the country as long as you declare it to customs. 

http://ontario-probate.ca/probate-basics/probate-fees-taxes/


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## AltaRed (Jun 8, 2009)

Agreed that we are simply speculating about Grandma's financial situation. The OP has provided no insight whether she is low income, middle income, or has the wealth to have a financial advisor/accountant/groundskeeper and maid with her large estate. I doubt the latter because the OP's question is otherwise suspect.

There is no real reason why beneficiaries can't wait until probate to get their hands on Grandma's TFSA as part of the estate. After all, they have the good fortune to be named beneficiaries rather than given the middle finger. Ge grateful. At least, a TFSA is not subject to probate fees if beneficiary designations are in place. People worry way too much about probate and probate taxes.

5 year GIC ladders are easy to set up to have a GIC mature every 3 months if necessary. It means 20 GICs if one wants a GIC to mature every quarter, 15 for one maturing every 4 months, 10 for one maturing every 6 months, etc. If Grandma's cash flow is tight, then keep X% of the total in a bank savings account. Indeed, banks like CIBC, BMO and Scotia have "high" interest saving account options available as long as one does not tap into them 'outside the rules'. My own BMO Savings Builder account pays 1.2% as long as I add $200/month and don't withdraw. If I withdraw, then that month's interest is a puny amount.... So what?

There are many options to help Grandma manage her own bank accounts, including a specific POA with limitations to pay bills, etc. The two signature option is a poor idea if the co-signer has to go to court when Grandma can no longer manage her affairs to get that changed (Grandma certified as mentally incapable). Better to have an Enduring POA with FI oversight.


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## agent99 (Sep 11, 2013)

I would advise grandma to find an independent financial/tax adviser. 

She had her money in a tax free appreciating asset. Other than a TFSA, hard to find an equivalent. 

If she does not need the money, she could buy an asset that over time might appreciate, like the house. Maybe gold bullion? Depends on the time frame. But no income that would attract taxes until sold. But what is wrong with paying tax on interest? Maybe she should ask her bank to put the money in a series of 2-5yr GICs. Income would me minimal and so would the taxes. She could offset the taxes by donating some of her money to good causes.


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## OhGreatGuru (May 24, 2009)

Too little information. You need a comprehensive understanding of Grandma's current financial needs; and what her future needs might be, before making any irrevocable decisions.

As far as tax-efficient investing vehicles are concerned, you have:
- equities, because they only have a 50% inclusion rate for personal income tax;
- Dividend funds/stocks, because of dividend tax credit for qualifying CDN stocks; 
- annuities, because part of the income is non-taxable return-of-capital.
- anything inside of a TFSA.

But we have too little information to comment on which of these would be appropriate to Grandma.

Putting money in joint accounts with younger relatives has more to do with estate planning than tax planning, and has to be approached with caution for a variety of reasons that have been discussed on other threads.

If, after reviewing her situation, Grandma decides she truly does have assets that exceed her foreseeable needs, she should set that money aside and gift it over time to her children/grandchildren. If she wants to have a bit of control over how it used, and if the grandchildren have RESP room, she could make RESP contributions.


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## OhGreatGuru (May 24, 2009)

Further to my above post, I see you received some generic investment advice on your previous post about Grandma's $100K portfolio http://canadianmoneyforum.com/showthread.php/89282-Investment-suggestion(s)

I note from that post that Grandma needs monthly income as she is in a retirement residence. The cost of this may go up if she needs more assisted living help as she ages. And long-term care is another ball of wax - though in Ontario long-term care is generally cheaper than retirement residences due to government subsidy.

In any case, if she is a TD customer, and wants a simple, no-brainer, neutral balanced investment, with some tax efficiency, she could do worse than TD Monthly Income fund. She can have the monthly payments automatically paid to her bank account. If, by the end of the year, this pays her more than she needs, she can write cheques to the grandchildren for Xmas. (Or maybe in April after she has paid her tax bill) The payments will be a mix of interest, dividends, and capital gains. The mix will vary from year to year depending on how markets are doing.

This fund is unlikely to suspend payments, but it could happen if we have a real depression. If that happens she can just withdraw capital to tide her over.

In any case, if I were Grandma I would not be in a hurry to give away my capital - just annual income that is surplus to my needs.


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## AltaRed (Jun 8, 2009)

The OP could have been more considerate, saving us time and energy by building on his original thread. OGG has some good advice in his post directly above.


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## Kbba (Oct 11, 2012)

Zipper said:


> You sound a little too eager.
> 
> She should not be co-signing anything.



Nice of you to be presumptuous and wrong at the same time, keep the day job though.


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## Kbba (Oct 11, 2012)

OnlyMyOpinion said:


> Kbba, If this is your Grandma's principal residence, she will not pay any tax on its increased value.
> 
> You shouldn't be calling this tax avoidance - you are not trying to illegally avoid taxes (I hope), just plan efficiently.
> 
> ...



No, not trying to avoid taxes altogether in the illegal sense, but essentially, she said she doesn't want it sitting in the bank doing anything with little interest and with her investments before, she felt like all she seemed to be doing was paying her financial adviser and "taxes, taxes, taxes". As I know little of the whole thing, I thought I'd post here and naturally will go to the bank with her sometime soon to find out more.
I guess everyone on here is a natural skeptic.

I guess I should have phrased it better by saying she wants to minimize the amount of taxes she'd pay and what's the best way to deal with the money that she'll be getting. Just slowly trying to help her figure things out as she's getting a bit paranoid about the whole thing IMO, but she's very controlling and watches every penny - having grown up in war torn Germany.
Thanks.

PPS - Very busy year yeah, she had to to fight off my cousin who was co-signed on her condo title because he wanted his share (of which he didn't put in a penny) of the condo.
She won, but legal fees were over $40,000K. So again, yes, busy year for her.


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## Kbba (Oct 11, 2012)

OhGreatGuru said:


> Further to my above post, I see you received some generic investment advice on your previous post about Grandma's $100K portfolio http://canadianmoneyforum.com/showthread.php/89282-Investment-suggestion(s)
> 
> I note from that post that Grandma needs monthly income as she is in a retirement residence. The cost of this may go up if she needs more assisted living help as she ages. And long-term care is another ball of wax - though in Ontario long-term care is generally cheaper than retirement residences due to government subsidy.
> 
> ...


I agree with your last statement, but she's fully cognitive and has all her faculties, the problem is in that when she wants something done, it's highly imperative "my way" mentality.
Will check with TD bank this week and set up an appointment. Thought I'd prod on here, but again, all the skeptics and mind readers are about. lol

But thanks for your input, I appreciate it.


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## AltaRed (Jun 8, 2009)

Kbba said:


> I agree with your last statement, but she's fully cognitive and has all her faculties, the problem is in that when she wants something done, it's highly imperative "my way" mentality.
> Will check with TD bank this week and set up an appointment. Thought I'd prod on here, but again, all the skeptics and mind readers are about. lol
> 
> But thanks for your input, I appreciate it.


The problem is that providing only a bit of information does not provide any context to the question. If you want the most useful answers, it is necessary to provide sufficient information so that others can provide useful answers. The original post had a potentially ominous motive to it. We've seen it all here. Don't crap on the messengers.


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## carverman (Nov 8, 2010)

AltaRed said:


> There is no real reason why beneficiaries can't wait until probate to get their hands on Grandma's TFSA as part of the estate. After all, they have the good fortune to be named beneficiaries rather than given the middle finger. Be grateful. *At least, a TFSA is not subject to probate fees if beneficiary designations are in place*. People worry way too much about probate and probate taxes.


Probate taxes can take a big chunk out one's estate. It's always better to find ways to MINIMIZE the estate's value and therefore the Probate taxes payable. 



> 5 year GIC ladders are easy to set up to have a GIC mature every 3 months if necessary. It means 20 GICs if one wants a GIC to mature every quarter, *15 for one maturing every 4 months, 10 for one maturing every 6 months,* etc. If Grandma's cash flow is tight, then keep X% of the total in a bank savings account. Indeed, banks like CIBC, BMO and Scotia have "high" interest saving account options available as long as one does not tap into them 'outside the rules'.


I have one of those GIC 5 year ladder schemes, and even if my age and health (at 71) was not an issue, I would never park my money into a 5 year locked in GIC plan again. A year is a long time to wait to get each GIC to mature, and 5 years can be a long time in one's life to get it all back. Pretty much all banks/FI will not agree to early redemption of GICs, unless there is obviously financial hardship that can be proved, or the death of the holder, without some penalties, nullifying any gain from interest earned.

The longer term GIC do pay more interest because your funds are locked in for a longer period of time. 
If you decide to invest your savings into short term GICs, not only do you have to deal with more paperwork while having to deal with investing in each one in specific periods of time, 
but the shorter the GIC investment time period, the less interest the GIC pays, 
so in the end a 6 month GIC barely pays more than just having your savings in a savings account these days.,,AND according to CRA rules, all interest earned even on 5 year GIC has to be declared each year
as the bank/FI send you T5 slips in February for the interest earned by each GIC.

I know that from the $60k that I invested in 2013 in a PCF Ladder GIC. I had 6x $6K GIC and 6x $4K GICs
and *received 12 T5 INDIVIDUALLY posted and mailed T5 slips after the first year in 2014 *of the 5yr ladder GIC(s)
Each year since then, as one $10k GIC matures, I get less T5 slips from the bank. For the tax year 2016,
I will only receive 3 x $6K and 3 x $4k T5 slips in the mail to open and file. 

Although there is less paperwork as each one matures, would Grandma be up to handling all this paperwork? 
She still had to declare all the interest earned for each one and file the slips for each one in her tax returns
each year. 

Like I said above, the shorter the time period of each GIC, the more paperwork is involved when filing income
taxes, and although I do my own taxes, I find this extra paperwork and declaration of interest earned
on a special CRA investment income sheet as *well as sending copies of numerous T5 slips into CRA on your
yearly tax return....... a bit of a chore. *

At least in the savings accounts, you can withdraw or transfer money to another FI that has promotional interest up to 6 months through ETF without any charges.to take advantage of promotional interest
for specific periods of time, 
BUT you do have to be computer savvy to do this to do this free of charge.

Otherwise the banks can charge as much as $50 per transaction to move your funds to another FI
if you ask them to do it over the phone. 



> There are many options to help Grandma manage her own bank accounts, including a specific POA with limitations to pay bills, etc. The two signature option is a poor idea if the co-signer has to go to court when Grandma can no longer manage her affairs to get that changed (Grandma certified as mentally incapable). Better to have an Enduring POA with FI oversight.


You have a point there. Alternately Grandma could have a trust account set up for her managed by a Trust company or bank. That would protect Grandma from any financial abuse.....
*but at a cost of course. The management fee for the trust account.*


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## carverman (Nov 8, 2010)

Kbba said:


> I guess I should have phrased it better by saying she wants to minimize the amount of taxes she'd pay and what's the best way to deal with the money that she'll be getting. Just slowly trying to help her figure things out as she's getting a bit paranoid about the whole thing IMO, but she's very controlling and watches every penny - having grown up in war torn Germany.


Thanks for that bit of info. I also, was born in Germany after the war in 1946, in a refugee camp.
My mother (who is Ukranian by birth and 92 yrs now), is also a refugee from Germany that immigrated to Canada in 1948 with nothing but the clothes on her back, worked hard on the family farm for 16 years
and lost everything when she had to leave due to spousal abuse by a cruel husband.
So, I do have some real life experience on financial issues, and I'm also trying to minimize my taxes on what I have left in my retirement years. 



> PPS - Very busy year yeah, she had to to fight off my cousin who was co-signed on her condo title because he wanted his share (of which he didn't put in a penny) of the condo.
> She won, but legal fees were over $40,000K. So again, yes, busy year for her.


That is so sad, but typical of can happen these days when someone in the family asks for favours then reneges on their agreement with the family member helping them out. 
It seems that the almighty dollar these days overides respect for family in some cases.

As far as the co-signer of her condo, that's pretty sad story. I guess she didn't know at the time, that anyone that signs on the title is entitled to half of the proceeds when the condo is sold. 

$40k is a lot for legal fees...almost as bad as my divorce legal fees at $50k..fighting
over money and support payments to the ex for 4 years!


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## Kbba (Oct 11, 2012)

carverman said:


> Thanks for that bit of info. I also, was born in Germany after the war in 1946, in a refugee camp.
> My mother (who is Ukranian by birth and 92 yrs now), is also a refugee from Germany that immigrated to Canada in 1948 with nothing but the clothes on her back, worked hard on the family farm for 16 years
> and lost everything when she had to leave due to spousal abuse by a cruel husband.
> So, I do have some real life experience on financial issues, and I'm also trying to minimize my taxes on what I have left in my retirement years.
> ...



Her understanding (and intent) was that after she died he would get the condo, not full control of it during the time in which she was alive. It wasn't a pretty time for the family at all, naturally I was on the receiving end of all her vented frustrations and it didn't help our relationship any. 
The irony is, they live in a very wealthy area of Mississauga and should have zero concerns for money when and if the parents decide to sell the house. 
But like you said, money does funny things and in dealings with the lawyer and her real estate agent, this is not too uncommon. It's one main driver of me wanting to simplify my own life, downsize, minimize my possessions and try to enjoy life as is.
While it's essential for basic needs, I'm not fan of it for anything else nor do I care to have crazy amounts of it. Oh and it destroyed my father as well, a very big, heavy, significant amount of it day trading from 2001-2008 and we all know how it turned out in 2008. 

I couldn't believe the legal fees either, but this lawyer and the firm were top notch, very good, but you get what you pay for.
If anyone ever needs a fantastic lawyer or a firm with a view of the CN Tower that's just beautiful (lol), let me know guys.


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## lonewolf :) (Sep 13, 2016)

Kbba said:


> My grandmother sold her house and the closing date is coming up.
> She's asking me to find out the best investment and/or best way to avoid having to pay taxes if the money were to say sit in a bank account.
> 
> Would gifting it to her 4 grandchildren be best? Co-sign some kind of saving account etc?
> ...


 No she should not gift it. She is old something happens to the currency she needs to protect her self by holding gold, silver or maybe another currency. The young are strong & can survive in hard times.


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## Jaberwock (Aug 22, 2012)

Max out her TFSA - apart from capital gains on a principal residence, the TFSA is the only legitimate way to avoid all taxes on investments.

Ask yourself this question - Is it better to make money and pay some of the earnings to the government, or is it better to make no money at all. I think the first option is best.

Invest the rest of the money in blue chip dividend paying stocks, with a focus on stocks that regularly increase their dividends. You will be able to put together a portfolio with returns exceeding 4% per year, plus potential for capital growth. The tax on the dividends will be quite low and may even be negative, depending on your grannies income level.

Don't worry about the probate fees, even in Ontario, the probate fees are only 1.5%. It is not worth manipulating your investments to avoid probate.

On her death, any capital gains in her account will be taxed at the capital gains rate, which is 50% of the regular tax rate. The investments stay in the estate until after the will is probated, and the money is distributed to the inheritors. If you are smart, this is where you can gain. Take your time distributing the funds, you can leave the estate open for a couple of years, and fill in a tax return for the estate, which will include all of the dividend income. Dividend tax credits will eliminate all tax on the first $50k or so of dividend income. Do it right, and what you save in taxes will be a lot more than what you paid in probate fees.


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## mordko (Jan 23, 2016)

TFSA does not allow to escape all taxes. Foreign withholding taxes would be lost.

Stock picking requires quite a bit of theory and effort, otherwise it's a crapshoot. ETFs or cheap mutual funds would be a more appropriate investment for someone lacking knowledge or time.


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## carverman (Nov 8, 2010)

Jaberwock said:


> > *Don't worry about the probate fees, even in Ontario, the probate fees are only 1.5% *. It is not worth manipulating your investments to avoid probate.
> 
> 
> Probate fees in Ontario are now called ESTATE TAXES.
> ...


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## AltaRed (Jun 8, 2009)

carverman said:


> Probate fees in Ontario are now called ESTATE TAXES.
> For a modest estate over $50k, (like a house or condo + savings and investment holdings), if it is valued a $500k, one mnute after your death, the Estate tax is $7.000
> 
> For an estate valued at $750K, it is now $10,750
> ...


With all due respect, those probate fees are peanuts. People fail to look at the big picture. They are looking at the roots of a single tree than the full forest. Another point from a number of upthread posts. NOTHING should be distributed by an executor until the CRA Clearance Certificate is issued....which can be 2 years or so after the Final Tax Return... OR a goodly portion of the estate must be held back from distribution until that CC is obtained. No executor in his/her right mind would expose him/herself to personal liability by over-distributing proceeds of the estate.

The main reason to mention this is because there is suggestion above that waiting for probate can hold up estate distributions to beneficiaries. Those distributions must be held up for the reasons noted, and especially so from RRSPs/RRIFs where substantial income taxes must be paid before the proceeds can be distributed to beneficiaries.

Added later: The point I am trying to make is people do all sorts of silly things like joint accounts, joint titles, excessive gifting, to folks other than their own spouse because the thought of a small percentage of tax gives them a rash. The risks of joint ownership in most cases is far more ominous than estate taxes. Money does strange things to otherwise civil and compassionate people.


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## AltaRed (Jun 8, 2009)

carverman said:


> I have one of those GIC 5 year ladder schemes, and even if my age and health (at 71) was not an issue, I would never park my money into a 5 year locked in GIC plan again. A year is a long time to wait to get each GIC to mature, and 5 years can be a long time in one's life to get it all back. Pretty much all banks/FI will not agree to early redemption of GICs, unless there is obviously financial hardship that can be proved, or the death of the holder, without some penalties, nullifying any gain from interest earned.
> 
> The longer term GIC do pay more interest because your funds are locked in for a longer period of time.
> If you decide to invest your savings into short term GICs, not only do you have to deal with more paperwork while having to deal with investing in each one in specific periods of time,
> ...


GIC ladders are not for everyone, but they do provide a higher level of interest overall, for a longer period of time, with more certainty than any HISA. Then again, the big banks have relatively poor rates overall. T5 tax slips should never be an issue. Grandma no doubt has someone do her taxes and all that tax preparer has to do is add up all the T5 interest on a calculator and make one entry into one's favourite tax software for Netfiling. As long as the total T5 amount on the Netfile meets or exceeds that which would be on file with CRA from the FI's, nothing more needs to be done. That said, this debate/discussion is really off-topic to this thread.


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## humble_pie (Jun 7, 2009)

perhaps i could invite altaRed to re-visit the spectrum of this OP's posts re his grandmother. Not just this thread, but other threads - see posts below.

i'm mentioning altaRed specifically because he is always scrupulously honest & painstakingly correct when it comes to dealing with the finances of elderly/vulnerable/impaired aging persons.

also, altaRed has picked up the unpleasant drift of this OP's remarks.

why is this OP - who says he is *clueless* about financial management - planning to fire the grandmother's longtime financial advisor - who has appropriately kept her in conservative investments - while placing his zero-knowledge self in control of grandmother's assets by flippantly consulting an anonymous internet chat forum?

imho this is a dysfunctional story. There is no sign of any care or concern for the grandmother's well-being as an aging human being. There is certainly no respect for the grandmother, instead the OP complains bitterly about her behaviour in almost every post.

as for the OP's complaints that grandmother's advisor-managed assets have done nothing except trigger taxes, this is exactly what portfolios for advanced age beneficiaries who are already living in senior care residences are designed to do. These conservative portfolios are designed to provide income for the senior, hence there are some income taxes. Rarely do such portfolios have a growth component; when they do, it tends to be a minor portion of the overall assets.

with a fighting family like this (remember, they hire lawyers to battle each other !!) a family member should be encouraged to find a 3rd party qualified professional advisor with the highest possible ethical standards. The welfare of the grandmother has to come first. 

such a qualified professional advisor will automatically consider quality estate planning, including tax reduction planning both while the grandmother is alive & also for her estate & her future heirs.




Kbba said:


> My grandmother has some investments at the moment and she'd like to withdraw because of family drama BS.
> 
> What she asked me to find out (and I'm absolutely clueless) is what/where would be the best place to put her roughly $100k in investments, something she could have access to, but at the same time, not too heavily taxed.
> 
> ...


.




Kbba said:


> ... she wants to minimize the amount of taxes she'd pay and what's the best way to deal with the money that she'll be getting. Just slowly trying to help her figure things out as she's getting a bit paranoid about the whole thing IMO, but she's very controlling and watches every penny ...
> 
> PPS - Very busy year yeah, she had to to fight off my cousin who was co-signed on her condo title because he wanted his share (of which he didn't put in a penny) of the condo.
> 
> She won, but legal fees were over $40,000K. So again, yes, busy year for her.



.


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## carverman (Nov 8, 2010)

AltaRed said:


> W CRA Clearance Certificate is issued....which can be 2 years or so after the Final Tax Return... OR a goodly portion of the estate must be held back from distribution until that CC is obtained. No executor in his/her right mind would expose him/herself to personal liability by over-distributing proceeds of the estate.


I'm not suggesting thAT ANy ESTATE DISTRIBUTION should be done AFTER DEATH OF THE PERSON. That can certainly run afoul of probate court and CRA. 

Howver, depending on family trust, the mother or Grandmother could give monetary gifts to her children or grandchildren before death.
That is perfectly legal and a gift does not have any tax consequence..at least not yet.



> Added later: The point I am trying to make is people do all sorts of silly things like joint accounts, joint titles, excessive gifting, to folks other than their own spouse *because the thought of a small percentage of tax gives them a rash.* The risks of joint ownership in most cases is far more ominous than estate taxes. Money does strange things to otherwise civil and compassionate people.


Again, it depends on family trust. If the son or daughter is intended to get some proceeds of the estate
on distrition of the estate after death, that is already a "given" and that gift done before death, reduces the value of the estate upon death and hence the probate taxes on the entire estate. This can only be done
with savings or regular checking accounts.


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## humble_pie (Jun 7, 2009)

AltaRed said:


> Added later: The point I am trying to make is people do all sorts of silly things like joint accounts, joint titles, excessive gifting, to folks other than their own spouse because the thought of a small percentage of tax gives them a rash. The risks of joint ownership in most cases is far more ominous than estate taxes. Money does strange things to otherwise civil and compassionate people.



the above post is an extremely valuable message imho

has significance for everyone
sooner or later

.


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## AltaRed (Jun 8, 2009)

humble_pie said:


> why is this OP - who says he is *clueless* about financial management - planning to fire the grandmother's longtime financial advisor - who has appropriately kept her in conservative investments - while placing his zero-knowledge self in control of grandmother's assets by flippantly consulting an anonymous internet chat forum?
> 
> imho this is a dysfunctional story. There is no sign of any care or concern for the grandmother's well-being as an aging human being. There is certainly no respect for the grandmother, instead the OP complains bitterly about her behaviour in almost every post.
> 
> ...


Thank you for articulating this better than I ever could. One thing to quibble about. The OP says it is his grandmother who wants to minimize taxes but there are so may unconnected dots and incongruences in this story that it is not clear what are the real dynamics. But you make one thing clear. In order for Grandma to have sufficient income to enjoy her retirement, and to feel secure about her future well being, income taxes need to be paid. Other than perhaps loading up a TFSA as much as possible, Grandma would have to be in 'risky' equities to further reduce (via eligible dividends and/or cap gains) the income tax load. 

The advisor probably already knows that the income tax load is 'unimportant' relative to Grandma's peace of mind with respect to certainty of current and future income. IMO, more time should be spent educating Grandma why paying income taxes at the level she is paying is really in her best interests. I had the very same conversation with my mother on a few different occasions over about a 15 year time spand before she died at age 96. My bro and I had her in about 70% GIC ladder, 15% RBC D Series Canadian Dividend Fund and 15% in RBC D series Balanced Fund. Income taxes are irrelevant for senior income under about $50k.


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## carverman (Nov 8, 2010)

humble_pie said:


> also, altaRed has picked up the* unpleasant drift of this OP's remarks*.


to this opinated remark,the OP earlier mentioned;



> I guess everyone on here is a natural skeptic.





> why is this OP - who says he is *clueless* about financial management - planning to fire the grandmother's longtime financial advisor - who has appropriately kept her in conservative investments - while placing his zero-knowledge self in control of grandmother's assets by flippantly consulting an anonymous internet chat forum?
> 
> imho this is a dysfunctional story. There is no sign of any care or concern for the grandmother's well-being as an aging human being. There is certainly no respect for the grandmother, instead the OP complains bitterly about her behaviour in almost every post.


What is YOUR PROBLEM?..Humble?

He's posting here to get some ideas and inviting opinions. No need to take him down. In every human relationship there are always extenuating circumstances and no..it's not always ..
"untill death do us part" in as in marriages..sometimes it's "I'll take the money and run with it!"


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## AltaRed (Jun 8, 2009)

carverman said:


> He's posting here to get some ideas and inviting opinions.


Then look at my post #28. The answers are simple...and it is not gifting nor joint accounts (attribution amongst other things), etc.


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## Zipper (Nov 18, 2015)

Kbba said:


> Nice of you to be presumptuous and wrong at the same time, keep the day job though.


I have been retired for 20 years.

I have been the executor for 6 estates.

I called you on this one because I sense you are jockeying for a better position with grandma.


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## humble_pie (Jun 7, 2009)

Zipper said:


> I have been retired for 20 years.
> 
> I have been the executor for 6 estates.
> 
> I called you on this one because I sense you are jockeying for a better position with grandma.



yes, many of us so sense each:

.


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## humble_pie (Jun 7, 2009)

:biggrin: duck everybody ! the carver is having another rageaholic attack !! shouting up a storm once again !!!


.


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## Eclectic12 (Oct 20, 2010)

Kbba said:


> No, not trying to avoid taxes altogether in the illegal sense ...


For better or worse, CRA defines "tax avoidance" as the illegal version ... which may be why there have been a few negative comments.

"Tax planning" or "pay the minimum taxes" is more the legal version.




Kbba said:


> ... essentially, she said she doesn't want it sitting in the bank doing anything with little interest and with her investments before, she felt like all she seemed to be doing was paying her financial adviser and "taxes, taxes, taxes".
> 
> As I know little of the whole thing, I thought I'd post here ...


Without details, it is hard to figure out whether focus is on the wrong thing (ex. a high tax rate) or whether there are opportunities to improve. Part of the challenge is that those retired like lower risk as they don't have thirty + years to make up for any missteps. That tends to mean the highest tax rate.

By the same token, if the proceeds of the house is $1 Million - where all the money is a 2% bank account, over a year this end up paying $20K. Total income will matter to figure out what the taxes are but using Ontario as an example (http://www.taxtips.ca/taxrates/on.htm), the rates can be a low of 20.05% (or a bit over $4K) to a high of 53.53% (or a bit over $10K).

Bank accounts typically are paying closer to 1% so it may be less.




Kbba said:


> ... I guess everyone on here is a natural skeptic.


For better or worse, with the approach taken ... at best it seems there is too much being expected based on almost no information while at worst, it can look look it is something you aren't all that keen on taking the work on.




Kbba said:


> ... I guess I should have phrased it better by saying she wants to minimize the amount of taxes she'd pay and what's the best way to deal with the money that she'll be getting. Just slowly trying to help her figure things out as she's getting a bit paranoid about the whole thing IMO, but she's very controlling and watches every penny - having grown up in war torn Germany ...


It would have been clearer ... don't forget that all kinds show up here, including some who have said they wanted to minimize taxes but though the comments, it became clear they wanted to evade the taxes they already had generated.


Regardless, I'd suggest sticking to a high level to see how much she is co-operating. As the saying goes, one can lead a horse to water but one can't make them drink!

This was true of my father as despite several sources suggesting he take on a bit more risk than savings accounts & GICs long before retirement, he refused. He later complained that his financial institution didn't offer to broaden his investments. In reality, he was offered the chance but until forced into it by low interest rates - he refused to listen.


Hopefully things go better but based on the family issues and childhood, there may only be a few limited opportunities.
Good luck.

Cheers


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## andrewf (Mar 1, 2010)

carverman said:


> Probate fees are calculated on the value of Grandmothers estate at time of death.
> under $50,000 there is a minimum probate fee tax, but above that it rises steeply.


This is very misleading. There is never a flat tax on estates in Ontario. It is 0.5% up to $50k, then 1.5% above that. "rises steeply" is a gross exaggeration. Insurance salesmen use probate as the boogeyman to scare gullible old people into complex and expensive products that cost more every year in management fees than the tax they are supposed to be helping to avoid.


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## OhGreatGuru (May 24, 2009)

I wasn't aware of the full extent of the "family drama" until I read some of the later posts above.

To OP: maybe your best bet is to say: "Grandma, I'd love to help, but I really don't know much about investing. And you know some (unnamed) members of the family might think I'm in a conflict of interest to be advising you. If you're not happy with your current financial advisor I'd be happy to drive you to meet some other advisors you would like to interview. If you really want, I'd even be willing to sit in on these interviews, but I don't how much I could add to the conversation, except to help you remember some of the questions you would like to ask."

OTOH, as at least one poster above noted, her present advisor may have given her perfectly sound advice on her current portfolio, given her age and her need for reliable income to meet her living expenses. But if she now goes to that same advisor and says "I've got X hundred thousand smackers from the sale of my condo. Do you think I can safely invest in something more tax-efficient, and if so how much of it?" That same advisor might say "Yeah, now you can afford to take on a little risk and volatility." So maybe you both should go and see her current advisor with that question. But Grandma better go prepared to tell her advisor her complete financial picture.

And if she doesn't want you to know her complete financial picture, you should stay out of it, other than to suggest that she revisit her advisor alone with that question.


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## Kbba (Oct 11, 2012)

lonewolf :) said:


> No she should not gift it. She is old something happens to the currency she needs to protect her self by holding gold, silver or maybe another currency. The young are strong & can survive in hard times.


Ironically enough, that's what I'm telling her to do, because if she needs it in the long term, then what. But as stubborn as she is, she wants it her way and just refuses to let it sit in the bank or in gold/silver. 
I told her that gifting would be no different than her letting it sit in her account. *shrug*


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## Kbba (Oct 11, 2012)

Zipper said:


> I have been retired for 20 years.
> 
> I have been the executor for 6 estates.
> 
> I called you on this one because I sense you are jockeying for a better position with grandma.


Congrats, I hope not to be old and crabby like yourself one day.

Ironically, I'm actually her POA and taking care of all her bills right now. Zero jockeying on my part, but you have to save face I get it Zippy.
I'm also dealing with my father's estate as well, doing a pretty good job I must say, not as hard as I thought people said it would be.

You called it wrong btw, good thing you're retired, I'd hate to to think someone actually paid you to do work with your attitude.


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## Kbba (Oct 11, 2012)

OhGreatGuru said:


> I wasn't aware of the full extent of the "family drama" until I read some of the later posts above.
> 
> To OP: maybe your best bet is to say: "Grandma, I'd love to help, but I really don't know much about investing. And you know some (unnamed) members of the family might think I'm in a conflict of interest to be advising you. If you're not happy with your current financial advisor I'd be happy to drive you to meet some other advisors you would like to interview. If you really want, I'd even be willing to sit in on these interviews, but I don't how much I could add to the conversation, except to help you remember some of the questions you would like to ask."
> 
> ...


This is probably what I'll end up doing, it's quite frustrating to be honest, she's a tough nut.
I know her financial picture as I'm her POA and dealing with all of her finances at the moment, sick of the paperwork and in fact, was hoping she would have hired TD to do her POA work, but she refused because of the charges. 
She has no adviser anymore as she wanted to transfer her finances to the local TD branch to deal with things.


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## carverman (Nov 8, 2010)

humble_pie said:


> :biggrin: duck everybody ! the carver is having another rageaholic attack !! shouting up a storm once again !!! .


Coming from you Humble, it can be regarded as BS. (Big Storm) :smug:


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## carverman (Nov 8, 2010)

Kbba said:


> Congrats, I hope not to be old and crabby like yourself one day.
> 
> Ironically, I'm actually her POA and taking care of all her bills right now. Zero jockeying on my part, but you have to save face I get it Zippy.
> I'm also dealing with my father's estate as well, doing a pretty good job I must say, not as hard as I thought people said it would be.
> ...


Good answer KBBA. While you sometimes get some good suggestions there is also a lot of "chaff" on this forum. 
Just like a harvester, while threshing, you have to separate the "wheat" from the "chaff".


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## carverman (Nov 8, 2010)

Kbba said:


> I know her financial picture as I'm her POA and dealing with all of her finances at the moment, sick of the paperwork and in fact, was hoping she would have hired TD to do her POA work, b*ut she refused because of the charges. *
> She has no adviser anymore as she wanted to transfer her finances to the local TD branch to deal with things.


Some times the banks can be on your side, and sometimes they can actually try to rip you off with excessive charges.

I investigated having RBC estate adminstration to take care of the provisions of my will, but over the phone when I estimated my estate being worth "somewheres around $300K", he mentoned it would be $6,000 for the RBC estate admin fees + any fees (probate courtestate taxes) + some other taxes like HST.

I told him "thanks but no thanks!". I rather give up some of my estate to a friend that I appointed as executor than to the greedy banks.
My kids are too far out of Ottawa to be of any use with estate adminstration when the time comes. My brother in Toronto and my friend in Ottawa will have to handle the details.
Administration of an estate can involve a lot of running around, as well as the paper work being filed in the county where the deceased lived.


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## carverman (Nov 8, 2010)

andrewf said:


> *This is very misleading. There is never a flat tax on estates in Ontario.* It is 0.5% up to $50k, then 1.5% above that. "rises steeply" is a gross exaggeration. Insurance salesmen use probate as the boogeyman to scare gullible old people into complex and expensive products that cost more every year in management fees than the tax they are supposed to be helping to avoid.


sigh! What part did you not understand Andrew?



> Ontario Estate Administration Tax Calculator
> 
> upto $1000 is $0 dollars Ontario Estate tax (plus the filing fee of course)
> Value Rate
> ...


in my case; $300K = $4000 estate tax (1.33% of the value of the estate)

http://yaleandpartners.ca/resource-centre/ontario-probate-fees-calculator/

What I was trying to say was that under $50,000 it can be seen as a minimal tax of $5 per thousand
For a deceased person who didn't own property or didn't have much money in banks or other investments,
it is a minimal tax.


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## Eclectic12 (Oct 20, 2010)

mordko said:


> TFSA does not allow to escape all taxes. Foreign withholding taxes would be lost.


True ... though since for most investments, Canadian taxes form the lion's share of the taxes to be paid - it is the top or second best choice.




mordko said:


> Stock picking requires quite a bit of theory and effort, otherwise it's a crapshoot. ETFs or cheap mutual funds would be a more appropriate investment for someone lacking knowledge or time.


Another good point.


Cheers


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## Eclectic12 (Oct 20, 2010)

Kbba said:


> Ironically enough, that's what I'm telling her to do, because if she needs it in the long term, then what. But as stubborn as she is, she wants it her way and just refuses to let it sit in the bank or in gold/silver.


 ... which may limit what you can do.




Kbba said:


> ... I told her that gifting would be no different than her letting it sit in her account. *shrug*


Without spending a lot of time on it, I can think of two ways gifting *is* different than letting it sit in her account.

The one she may be happy with is that once the gift has been made, she no longer has to pay any taxes on future income/growth. The one she may be less happy about is that once the gift has been made, she has given up ownership/control. Those receiving the gift can do with it whatever they please.

I'm all for not beating one's head against a wall to have a good choice made but since you say you have POA, outlining the pros/cons from her perspective IMO is the minimum one should do. 


Cheers


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## Retired Peasant (Apr 22, 2013)

tax evasion = illegal
tax avoidance - not illegal; it's just structuring things to pay the minimum taxes - isn't that what we all do?


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## carverman (Nov 8, 2010)

Retired Peasant said:


> tax evasion = illegal
> tax avoidance - not illegal; it's just structuring things to pay the minimum taxes - isn't that what we all do?


It's just a contradiction in terms..yes?/no?
Everyone strives to pay as little in tax as possible but legally...yes?/no?

This thread is starting to get a lot of mileage. Good thing we have old folks around to make us wonder about what is the best way to pay only what we really need to pay the taxman and keep the rest for
ourselves. 

Now the ideal solution would be for "Grandma" to gift some of her estate to me..Carverman. 

Looks like I will need a hospital bed soon..one of those electric beds would do just fine thankyou.:barbershop_quartet_


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## redsgomarching (Mar 6, 2016)

Tax evasion = illegal
Tax avoidance= not necessarily illegal but frowned upon as the main objective is to evade paying taxes. 
Tax planning = not illegal, utilizing tax provisions to minimize tax payable.

My views on this. Personally, OP, don't get involved if you do not know what you are doing. I used to work with estates at the bank and the process is not only draining for those involved but can turn really nasty when dealing with other family members.
You could be doing your Grandma a favor by helping her out and heck she might even name you executor of her will but ultimately her will can be to leave you nothing and after doing all of the work of helping her out and being executor (while you are entitled to reimbursement of certain expenses) can leave you with a sour taste and an eventual squabble with other family members. 

Maximize beneficiary forms/successor documents etc to avoid some grievances but really when dealing with a large estate and a large family most likely outside help is actually very beneficial.

If your Grandma is adverse to paying taxes then maybe she will have to get more help than her grandson (no offense to you). If this is the case she needs to be prepared to pay fees for this type of help or learn it herself.


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## OhGreatGuru (May 24, 2009)

_I know her financial picture as I'm her POA and dealing with all of her finances at the moment, sick of the paperwork and in fact, was hoping she would have hired TD to do her POA work, but she refused because of the charges. 
She has no adviser anymore as she wanted to transfer her finances to the local TD branch to deal with things._


That answers the other question I didn't get around to. As her POA you certainly need to be aware of her financial dealings. Unfortunately it sounds like Grandma doesn't take advice very well. Good luck.


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## carverman (Nov 8, 2010)

redsgomarching;140689
My views on this. Personally said:


> It all depends on the family relationships. If it's good with everyone concerned, there is no reason not to deal with Grandma's will as executor and POA )which btw, ceases to exist upon Grandma's death
> at which point, it's only her current will that will provide the details on how she wants her estate to be distributed.
> 
> 
> ...


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## Retired Peasant (Apr 22, 2013)

carverman said:


> As executor, you are allowed to include in the will, a executor fee (up to 5% I believe)


It might depend on province, but in Ontario if it isn't mentioned in the will, it's 1.5% in total (i.e. if there is more than one executor, they split the 1.5%)
If it is specified in the will, they can make it any amount they like.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> It all depends on the family relationships.


It doesn't sound like the relationships are good, knowledge levels or co-operation are all that good. The OP is in a better position to know.




carverman said:


> ... *As executor, you are allowed to include in the will*, a executor fee (up to 5% I believe), of the net proceeds of Grandma's estate for all of your troubles and expenses as excutor, so there is a way.


I think there may be bad wording here ... I doubt an executor can include or change anything in the will. They can suggest to the person making the will but ultimately, as I understand it after death, what is or is not in the will sets the process. If this wasn't already discussed and any updates made to the will before death - the executor seems to have no influence.

Putting the provision in the will is probably the best way to go as it defines the fee, settling the issue. The other beneficiaries may complain but it is legally binding.

Where there nothing in the will, it seems the the executor would then *propose* the fee as part of the financial statements to the beneficiaries with a request to sign off on it. If one beneficiary disputes it, it may be a judge that does the setting.
http://estatelawcanada.blogspot.ca/2009/09/executor-compensation-how-do-we-know.html




carverman said:


> ... I have that provision in my will with my executor.


Which probably means you had a good lawyer but according to the link ...


> Most Wills don't say how much an executor can charge.





carverman said:


> ... Again, one cannot make assumptions without first talking to Grandma.


True ... though the request to look for ways to be tax efficient with the investments is alleged to have come from Grandma. Grandma seems to be making the assumption that the OP is going to be able to learn/find these things plus be able to convince Grandma to use them. Whether Grandma is also assuming the OP can/is willing to do this for free is another question.




carverman said:


> ... Taxes have to be paid one way or another, you can't escape those, but you can certainly mimimize what your estate has to pay upon death.


True ... but there's what can be done for taxes now and what can be done to streamline as well as reduce the estate taxes. Whether Grandma is willing to use what is available is a different question (ex. give some tax paid up gifts to the beneficiaries before dying but lose ownership).


Cheers


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## carverman (Nov 8, 2010)

Retired Peasant said:


> It might depend on province, but in Ontario if it isn't mentioned in the will, it's 1.5% in total (i.e. if there is more than one executor, they split the 1.5%)
> *If it is specified in the will, they can make it any amount they like*.


Exactly. I specified it in my will. Executing a will involves a lot of legal hassles, so it depends on the estimated value of the estate at the time when the will is first drawn up. You don't expect anyone to do this for nothing. It can be very time consuming. 

1.5 % of a estate, let's say roughly estimated at $50,000 is only $750 for the executor that he receives from the proceeds of the estate when it is all finished.

Since the banks and FI will freeze all money in owned by the person, (unless there is a beneficiary on record) at time of death. The executor has to come up with the money for probate estate taxes in order to have the frozen accounts released by the banks to the excutor's trust account for payment of claims and final distribution after all taxes are paid to CRA. 

On a estate of higher estimated value, the probate fees can be quite significant.
The executor, (if they do not have the money to pay probate) has to borrow the funds and pay interest on those
funds until the estate is given clearance by probate.


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## carverman (Nov 8, 2010)

Eclectic12 said:


> I think there may be bad wording here ... I* doubt an executor can include or change anything in the will. *They can suggest to the person making the will but ultimately, as I understand it after death, what is or is not in the will sets the process. If this wasn't already discussed and any updates made to the will before death - the executor seems to have no influence.


Yes, the executor cannot change the wording or amounts specified in a legal will, but as you mention, the executor can think of how much they might want to specify in the will (as I did with my will lawyer), for my executor and backup executor can receive as a fee. But the final percentage was left up to me to determine.



> Putting the provision in the will is probably the best way to go as it defines the fee, settling the issue. The other beneficiaries may complain but it is legally binding.


Yes,that is what I did.



> Where there nothing in the will, it seems the the executor would then *propose* the fee as part of the financial statements to the beneficiaries with a request to sign off on it. If one beneficiary disputes it, it may be a judge that does the setting.
> Which probably means you had a good lawyer but according to the link ...


Yes, my recent will, done by a good lawyer, specified the gifts, to a friend that is looking after me in my
disabled years, and two charities that I have supported all along.


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## kcowan (Jul 1, 2010)

carverman said:


> On a estate of higher estimated value, the probate fees can be quite significant.
> The executor, (if they do not have the money to pay probate) has to borrow the funds and pay interest on those
> funds until the estate is given clearance by probate.


In our experience, the bank will advance reasonable and usual expenses such as funeral fees and probate fees before an executor is confirmed (TD). Best to check with her bank.


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## Eclectic12 (Oct 20, 2010)

Retired Peasant said:


> It might depend on province, but in Ontario if it isn't mentioned in the will, it's 1.5% in total ...


Is this a recent change?

As of 2011 ...


> For example in Ontario, the fee is 2.5% of the receipts of estate and 2.5% of the disbursements of the estate.


http://www.thebluntbeancounter.com/2011/04/you-have-been-named-executor-part-2-now.html

Most blogs talk about it being up to 5% ... though I have yet to find a gov't official schedule for Ontario.
http://www.advisor.ca/tax/estate-planning/understand-executor-compensation-rules-202637


Cheers


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## Eclectic12 (Oct 20, 2010)

carverman said:


> Yes, the executor cannot change the wording or amounts specified in a legal will, but as you mention, the executor can think of how much they might want to specify in the will ...


As it seems most wills don't cover this topic ... I suspect few executor's are discussing it with the person making the will.

Even worse, I know of some executors who know where the will is but have no idea of the contents.


Cheers


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## carverman (Nov 8, 2010)

Eclectic12 said:


> Most blogs talk about it being up to 5% ... though I have yet to find a gov't official schedule for Ontario.


Up to 5% is what my lawyer told me.

As far as the banks releasing funds, most are hesitant to release funds from the deceased bank accounts until they get some assurance 
(like a probate court clearance) or some legal form to ensure they are not responsible for any liability
upon paying bills for the deceased account holder. 

Most banks will allow funds to be withdrawn from the deceased’s bank account to pay for the funeral expenses and the actual probate fees but not necessarily by the appointed executor of the estate
to avoid possible misuse of funds.
However, they can be very restrictive initially and each bank has its own set of rules. 




> The deceased may have had bank accounts or investment accounts in his or her own name. These account are normally frozen on the death of the owner. Once the executor obtains probate, the bank or investment advisor will release the funds to the executor.





> As mentioned, the follow-up question to whether an account is frozen is *whether an executor must pay estate expenses out of his own pocket.* In particular, funeral bills were a concern, as they tend to amount to thousands of dollars. The good news is that if an *executor or family member takes the funeral bill to the bank where the deceased held his account, the bank will pay the funeral bill directly from the deceased's money. *The money won't be given to the executor or family member; it will be sent directly to the funeral home.





> This holds true for other expenses as well, as long as they are obviously bills that the deceased would have had to pay, such as the utilities on the deceased's home. This is up to the individual bank branch to determine, but it's always worth asking


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## NielsJensen (Dec 19, 2016)

*Thanks*

Thanks for sharing this!


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