We tailor creative solutions to fit each family’s unique circumstances
Similar to an architect, our primary role is to facilitate the design and the implementation of your comprehensive estate plan. As senior Trust and Estate Practitioners, we are well-versed in the various methods used to achieve a family’s objectives within their estate. First and foremost, we present families with the various options available to them. By providing a thorough understanding of the estate planning process, the most suitable solutions can be determined within the scope of a family’s unique circumstances. Once the best course of action is established, we coordinate the implementation
of your estate plan in collaboration with the most qualified team of professionals available. This team may be comprised of a family’s current team of lawyers, brokers and accountants or of our capable in-house experts.
The concepts and ideas presented are for information and explanatory purposes only; they are not suitable for all circumstances. Obtain professional advice prior to initiating any estate plan, including the use of the concepts expressed herein.
Will Planning
Will planning is the most traditional approach to designing an estate plan.
Will planning should be comprised of three key legal documents: a will, an enduring power of attorney and a personal directive. Enacted upon death, a will provides instructions for the distribution of your estate as well as appointing an executor to act on your behalf. By contrast, an enduring power of attorney and personal directive both come into effect during your lifetime in the event of that you are unable to manage your affairs. An enduring power of attorney determines who will administer the financial side of your estate; a personal directive appoints an agent to manage non-financial matters, such as your personal care and health choices.
Trust Planning
When applied under the right conditions, trusts can offer a remarkable sum of benefits
Essentially, a trust is a legal relationship that maintains ownership of an asset on behalf of a beneficiary. Unlike a will, a trust may provide a family with taxation, matrimonial and credit protection. In addition, your wishes and estate are held privately. With the assistance of a qualified Trust and Estate Practitioner, trusts can be tailored to fit you and your family’s specific requirements.
Trust planning is often a missed opportunity for most Canadians. Although trusts have been available in Canada for quite some time, it is only until quite recently that our country has contained enough wealth to take advantage of trust law. For countries with an extended history of prosperity, such as the United States and Britain, trusts have been in use for hundreds of years.
Case Study:
Client Challenge: A couple in their late fifties bought a piece of lakeside property with the intention of building a cottage to enjoy with family during their retirement years. The real estate agent estimated that upon building the structure, the value of the property would double, thus resulting in a substantial capital gain. The couple had envisioned that their cottage would be a source of enjoyment for their children and grandchildren long after they passed. However, upon their passing, a huge amount of tax would be owed on the cottage. Should the estate be unable to absorb this immense cost, the couple’s family would run the risk of losing the property entirely.
Creative Solution: In order to avoid the capital gains tax, the clients’ cottage was put into trust. By effectively deferring the tax burden to the next generation by way of trust, the asset will be effectively protected for generations to come.
Business Succession
Proactively planning a clear and timely business succession scheme will help to secure your company’s future prosperity.
Remarkably, seventy percent of all family businesses in Canada fail to properly succeed to the next generation due to poor planning. In order to avoid unnecessary complications, it is important to use the most qualified professionals available.
Our planners have an extensive understanding of the structures that regulate business transfer and succession. Acting as an unbiased consultant, a planner devises a competent exit strategy based upon a business owner’s unique retirement objectives. Once a realistic course of action is determined, a planner guides and supports the transition process from beginning to end.
Case Study:
Client Challenge: A wife-and-husband team running a successful family business had begun to plan their retirement strategy. They had two adult children, one working in the family business and the other employed in a company abroad. The child that worked abroad had never expressed any interest in the family business. Consequently, this led them to assume that she was not committed to its future.
Client Solution: Upon interviewing the two children, we discovered that the exact opposite was true. The child currently working within the family business intended to end his involvement once the parents were no longer part of the day-to-day aspect of the company. By contrast, their daughter was very passionate about her family’s business. In fact, her education had been pursued in expectation of continuing-on her family’s legacy. Our clients concluded to give their son a cash settlement upon their passing. Currently, the daughter has begun grooming under her parents in order to succeed the business.
Due to the daughter’s innovative business practices, the family business has been projected to grow quite substantially. In order to ensure proper succession, the family business was put into trust and the current business value was frozen within the parent’s estate. This method will effectively protect both parents and children as well as defer a substantial amount of tax on the growth of the business.
Asset & Investment Protection
Preserve and protect your assets and investments from unnecessary risk.
Assets and investments should ultimately supply families with a concrete source of income for retirement. Unnecessary losses due to tax, market fluctuation or other external forces, such as divorce, bankruptcy or a lawsuit, can be avoided if the proper precautions are taken. There are a multitude of devices available that can shield your estate from undo risk. As part of our comprehensive estate planning services, we thoroughly review your current assets and investments in order to verify that they are structured appropriately and in the most secure manner possible.
Tax Planning
Establish a solid tax strategy to reduce tax implications within your estate.
When proactively planning an estate, a main focus is often tax savings. Each year, countless individuals pay an excessive amount to Canada Revenue Agency. Although tax is an unavoidable reality within even a well-composed estate, by using the right tools and knowledge, this sum can be significantly reduced or deferred.
A proper tax plan should account for both domestic and international issues. Many families are unaware that internationally held assets, such as US property or investments, are liable to both US and Canadian estate taxes. Failure to structure these assets within a larger tax scheme will inevitably cause their real values to be reduced.
In addition to the aforementioned risks, foreign assets can also legally create multiple estates. For instance, by owning property in the USA, you are recognized to possess both an American and Canadian estate. Upon an individual’s passing, these two estates will need to be settled, adding considerably to the amount of time and money required. As experts, our contemporary understanding of current domestic and international legislation enables us to devise the most innovative means of minimizing the workload surrounding an estate while maximizing its total net-worth.
Case Study:
Client Challenge: In order to avoid high tax rates, many couples will spend their entire lives developing an estate with an equal division of assets. However, these couples are unaware that upon one partner’s passing, the remaining partner is automatically inserted into a higher tax bracket. Consequently, years of methodical and strategic income splitting are wasted.
Creative Solution: Upon one partner passing, the deceased spouse’s asset base is set to automatically be transferred into a spousal trust. The remaining spouse will continue to have access to the assets and monies held in the spousal trust. However, this mechanism will effectively prevent him/her from being bumped into a higher tax bracket. Moreover, the family unit can continue to income split.
Generational Planning
Transfer your estate to the next generation in both a tax-efficient and harmonious manner.
A comprehensive multi-generational strategy is extremely beneficial for families. In addition to substantial tax advantages, generational planning may determine the nature of a family's future dynamics. Acting as an unbiased third-party, a MacMillan planner provides guidance and objective advice to everyone involved in the estate planning process. By addressing any underlying issues before they become real hindrances, discord amongst loved ones can be easily prevented.
An estate freeze is a useful concept that we often utilize when generational planning. Once an asset is put into an estate freeze, any future growth of all or part of the asset’s current total value is transferred automatically to the next generation. As a result, this defers taxes owed upon the asset that may hinder its smooth succession.
Case Study:
Client Challenge: A couple with a large family had a considerable collection of antiques. Recently, one parent had passed away. The remaining parent wanted to prevent any conflict that could potentially arise within her family over the antique collection when she passed.
Creative Solution: Under our client’s direction, we organized a family BBQ where a mock auction took place. Each family member was given an equal amount of monopoly money that they could use to bid on the items of their choosing. By the end of the auction, each family member had laid claim to certain designated pieces that they deemed were most sentimental to them. Subsequently, our client took solace in knowing that upon her passing, any potential discord arising from her collection had been negated.
Charitable Giving
Offset tax in the year of death by benefiting a charity of your choice.
Upon the year of death, one hundred percent the tax owing upon an estate can be given to a charitable organization of the estate holder's choosing. Instead of surrendering a dollar amount to Canada Revenue Agency, many have chosen to support a charity or begin a legacy by creating a charity or bursary program.
Case Study:
Client Challenge: To both minimize tax owed and create a legacy upon passing.
Creative Solution: Our client decided that she would like to set up a bursary to aid deserving students in their post secondary studies. However, unlike the conditions of most bursaries, her bursary was quite unique. Although never at the top of her class, our client had worked hard during her studies. She felt that average students were too often overlooked and under-appreciated in the academic world. In order to remedy this, we helped her create a bursary that financially awarded only those hardworking students with a GPA between 65-80%.
Probate & Estate Administration
Complete your estate plan to help ease the emotional and financial burden on your family in the future.
When a loved one passes away, their estate goes through the process of probate. Probate is a court supervised process of validating a will and establishing the distribution of assets of the deceased, including the payment of any outstanding debts. For a trustee, executing an estate can feel like a part-time job. Expensive and complex, probate can take an average of 18 months to finalize. Moreover, beyond the court’s initial filing costs, additional fees can be quite substantial depending on each Province’s specific terms. Fortunately, by proactively planning an estate, a great portion of this work can be avoided or considerably simplified.
Over the years, MacMillan Estate Planning has accumulated ample experience helping families with estate administration. Our extended knowledge of Probate’s intricate requirements enables us to execute an estate both efficiently and effectively.
