Having a valid will at the time of someone’s death can help reduce the stress of sorting through someone’s estates. A valid will allows beneficiaries to receive assets as the recently passed intended. It also allows the surviving family to avoid intestacy laws, which means dividing assets per legislation.
Another, often overlooked, part estate planning is to make the passing of assets to beneficiaries financially advantageous. This means, there may be ways for families to reduce or avoid probate and other taxes on a loved one’s property.
A recent article posted in MoneySense magazine outlined a woman who was concerned that her parents had not done enough to avoid probate and federal taxes in their will. As the only child, the woman feared she would be left with this financial burden.
The article summarized the situation, and concluded that while there may have been opportunities to avoid taxes, they may not always work in a family’s favour depending on the situation. The takeaway from the article is that every family is different, and so should the decision-making for a family’s financials when estate planning. There is no “one-solution” fits all.
What’s important to note is that there are different ways to avoid taxes on certain assets. Having accounts and property in both parents and adult children’s’ names may allow assets to pass from one person to another without tax penalties. However, depending on your current situation – for example, if you are divorcing a spouse – this could pull your parents’ assets into the divorce proceedings.
Tax laws regarding estates can be a complicated situation. This is why it’s important to make sure you discuss these issues with your family, as well as with an experienced estates lawyer. It’s essential to understand what options you have at your disposal, and how they will impact your unique family situation.