DOLLARS AND SENSE -1°S ALWAYS more expen- sive to tidy up a mess later _than to plan ahead and avoid the mess. That was the message lawyer Margaret Mason, of. Bull, Housser & Tupper’s tax and trusts group, delivered to the fifth annual plan- ning school put on by the B.C. Association of Financial Planners. - Mason was dis:ussing various ‘approaches people should consider when they do their estate plan- ning, starting with drawing up their wills. “First; you must decide who should inherit,” she said. “For example, you might want to leave the family cottage equally to several children. But the kids’ might not want to use it equally. ‘Perhaps one kid is in school ‘and one isn’t working. Who will pay for a new roof? -. ,-“*With holiday property, there - ‘could be an income tax bill to pay on death when it’s left to children. Should the estate pay this tax? “That would mean all the. - children share the tax bill. Perhaps nna ay re 44 /1t’s important to get up some mechanism through the will to help resolve disputes. 99 the child(ren) who will benefit from the property should pay the tax.”” Mason said peopie often want an asset like a cotiage to stay ia the family forever, but she warned it’s difficult if not impossible to achieve this. “You have increased frac- tionalization as the property is passed on to successive genera- tions,’’ she said. ‘‘Even using a trust won't work.'" Mason said it’s important to be specific. That can often eradicate uncertainty and even expense. ‘‘If only one child is interested in a particular asset, you could give it to that child and then adjust all the beneficiaries’ shares accord- ingly.” If you do decide to leave an asset to all the beneficiaries, you can leave it to them as tenants in .ommnion, she said. That way, each person's share can be sold or passed on to the next generation. Mason said it’s also important to set up some mechanism through the will to help resolve disputes. “While this might not always be enforceable, having those guidelines could be acceptable to the beneficiaries,”’ she said. < “For example, the children could de offered an option to “When GIC interest Rates Ace Not Enough ..." Feawuring David Ogilvie, B.A. (Econ), C.EP. Great Pacific Management Where: When: Lonsdale Quay Hotel Tuesday, Nov. 23, 1993 7:30 pm Learn how you can get a higher —_—— ‘buy’ an asset as part of their share of the estate; otherwise the asset would be sold and the pro- ceeds distributed according to the terms of the will."” Many people have explored ways to “‘erystallize”’ the capital gain on recreational property so they can use their capital gains exemption while it still exists. This often involves giving the oroperty to their adult children now to trigger the capital gain. But parents are concerned thal if theit children have marriage problems, an ex-son/daughter- in-law could end up with part of the property or at least part of its value. “An inter vivos trust, created while you are alive, can be used both to trigger the capital gain and also te provide protection against a potential problem iike this,’? Mason said. On the other hand, witha testamentary trust (set up in the will), you can defer capital gains All-Season Radial planning and other income taxes until and sometimes even beyond death. Any trust shifts control of an asset, SO it’s important to get ex- pert advice to make sure the benefits outweigh any disadvan- tages, including setup and ad- ministration costs. Your will says what happens after you die. But if you are alive and unable to manage your af- fairs, somebody should have a power of attorney to act on your behalf. “Make sure you name some- bady you trust absolutely,”” Mason said. “And if you are acting as power of attorney — typically an adult child dealing with an elderly parent’s affairs — it’s extremely important to keep careful records. “You must realize the legal responsibilitics you have. Other- wise, you could end up in court if you are challenged to account for what you have done.”’ Mason said you ure most at risk when you reimburse yourself. Unless you have records, it could appear you are simply taking the money. “Typically, you might have been paying Mum’s bills with your own money — cash or your credit card — over a period beccuse it was simpler than always writing cheques on her account,’’ she said. ‘Then you estimate what she owes you and write just the one cheque on her account to pay yourself back. “But you open yourself toa serious !egal challenge unless you have a complete record, including | Revolutionary All-Season receipts, to show the reimburse- ment cheque exactly matches what you spent for Mum.” Mike Grenby is a North Shore-based columnist and in- dependent financial adviser who works with individuals; he will answer your questions as space allows — write to him c/o The North Shore News, 1139 Lonsdale Ave., North Vancouver V7M 2H4. | INTERESTED IN SAFE | ALTERNATIVES? 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