Question
Adam is 65 years old and is reviewing his estate plan because he had a friend of his pass away recently and his estate had
Adam is 65 years old and is reviewing his estate plan because he had a friend of his pass away recently and his estate had to pay a lot of money in taxes. He wants to ensure that if something happens to him that he has his estate structured to minimize the taxes. He and his wife, Rebecca, have the following assets:
| Asset | Ownership | Fair Market Value | Book Value | Beneficiary Designation |
| Home | Joint tenancy | $750,000 | $350,000 | |
| Non-Registered Stock Portfolio | Adam | $200,000 | $160,000 | |
| RRSP | Adam | $620,000 | $420,000 | Rebecca |
| RRSP | Rebecca | $360,000 | $220,000 | Adam |
| Whole life Policy (Insured = Adam) | Adam | $550,000 | None | |
| TFSA | Adam | $80,000 | $60,000 | |
| Cottage | Adam | $330,000 | $200,000 |
Rebecca is the beneficiary of Adam's estate for all assets other than the cottage. Adam wants to leave the cottage to his son Hayden as he loves spending time there. Rebecca opts to maximize all rollover opportunities. Assume that Adam's tax rate is 30% in the year of death.
- If Adam were to die today, what would his estate have to pay in Estate Administration Tax?
- If Adam were to die today, what would his estate have to pay in taxes? Explain?
- What two recommendations would you give to Adam to reduce EAT and taxes on his Estate? What are the benefits and drawbacks of each recommendation?
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Financial Accounting Practice And Principles
Authors: Jan Bebbington, M. Richard Laughlin, Robert H. Gray, Gray Dave
3rd Edition
1861527713, 978-1861527714
