In this presentation, FMC’s Doris Bonora and Mark Woltersdorf outline the important considerations when planning before death, including:
- Power of Attorney
- Personal Directive
- Farm Tax Planning
- Estate Freeze
- Wills
8. If no EPA or PD was Prepared
•Adult Guardianship and Trusteeship Act
– Appointment of trustee and guardian
•increased costs for legal and medical report ($500‐$700
for medical report and $750‐$1500 for legal fees)
•trustee to file accounts with the Court
•all family notified… public guardian to interview person
•report of decisions filed
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12. Farm Tax Planning
•Tax Integration
– consider impact of integration:
•personal 39%
•small business dividend 37.8%
•general rate dividend 39.7%
– capital gains
•personal 19.5%
•corporate flow‐through 20.4%
– since 2006, GRIP dividends allow corporate tax
deferral – 25% vs. 39%
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13. Farm Tax Planning
•Lifetime Capital Gain Deduction
– $750,000 per individual for QFP or QSBC
– savings in Alberta of up to $146,250
– watch for alternative minimum tax
– real property in corporation or leave in individuals
hands (rollovers, integration, corporate finance)
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14. Farm Tax Planning
•Inter‐Generational Rollovers
– spousal and CLP rollovers available for farm and non‐
farm property
– children – s.73(3) – a powerful planning tool where
farmer transfers land, depreciable property or ECE
– often used where another person is added to title
– child, grandchild, great grandchild or wholly‐
dependent before age 19
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15. Farm Tax Planning
•Inter‐Generational Rollovers
– children – s.73(4) – a powerful planning tool where
farmer transfers shares of a family farm corporation or
an interest in a family farm partnership
– child, grandchild, great grandchild or wholly‐
dependent before age 19
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16. Farm Tax Planning
•Reserves
– children – s.40(1.1) – a reserve up to 10 years may be
claimed by taxpayer where property disposed to a
child
– property includes farmland, shares of family farm
corporation, interest in family farm partnership, QSBC
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19. Will
• Make specific decisions about farm land, machinery,
livestock and home quarters
• Don’t leave all the decisions up to the executor and the
beneficiaries
• Consider trusts for tax reasons or for dealing with
problems such as disabled children or addictions
• Set deadlines on when the farm will be sold or
transferred
• Distribute personal items (jewellery, china, etc.) – have a
set of directions…. choose in birth order, have a sale, have
a list of items and who will receive them
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22. Pre‐Retirement Estate Planning
•Retiring allowance – service prior to 1996 ‐ $2,000
per year plus additional $1,500 prior to 1989 if
not a member of a company pension plan
•Individual Pension Plan – may permit accelerated
tax‐deferred contributions
•Use of Holding Corporations – may defer personal
taxation – avoid OAS grind
•Trust – use as a Will substitute – powerful
planning tool
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23. Farm Tax Estate Planning
•Bequest to Child
– general rule is that property is deemed disposed of at
death at fair market value
– s.70(9) provides exception to general rule for land and
depreciable property
– s.70(9.2) for family farm corporation or interest in
family farm partnership
– elect between FMV and cost
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25. Farm Tax Estate Planning
•Reserves at death
– generally no reserve may be claimed in the year of
death
– exception occurs where the right to receive an amount
is transferred to spouse, CLP or spousal trust
– reserve deducted by deceased and included in income
of transferee
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