(NC)-It is often said that nothing is certain but death and taxes, yet there is still every reason to hedge your bets and prepare a will.

Chartered Accountant John Wonfor, National Tax Partner, BDO Dunwoody LLP, National Office in Toronto, says that a will allows you to make choices and distribute your assets the way you want.

“Then you have confidence that you have looked ahead. You can now begin to think about tax planning, as well as the emotional issues that can often arise.”

“Because your desires may change at different ages and stages of life, you should update your will as circumstances change,” says Chartered Accountant Jim Booth, Partner, BDO Dunwoody LLP in Oakville.

“Without a will, your estate will be administrated by the Ontario Public Guardian and Trustee, where they will determine which beneficiaries receive what proportion of your estate.”

A will also allows you to either defer or save taxes.

“By giving your spouse any assets that will grow in value such as an RRSP or recreational property that is not a principal residence,” Wonfor explains, “you can defer the taxes on these assets until your spouse’s death.

“Establishing testamentary trusts to hold cash and income-earning investments can also save taxes. Multiple trusts can be set up, one per child. These are taxed at graduated tax rates, allowing for potentially lower taxes and wealth preservation.

“In the insurance business, one popular strategy is to buy a life insurance policy that specifically designates the proceeds to care for a child with special needs,” notes Wonfor.

“Insurance policies are also used for making charitable donations. By designating a registered charity as the beneficiary, the proceeds qualify for a tax credit on the final personal tax return.

“In Ontario, you may be able to reduce estate-administration fees by creating two wills – one dealing with assets that do not need to be probated, such as shares of private companies; and the other for additional assets,” advises Wonfor.

“It’s a serious mistake not to have a will,” says Booth, “because it can help provide for other personal and business situations too.”

“If you have minor children, you can appoint a guardian in your will, making sure that the person you’ve chosen has values you respect and is willing to accept this responsibility.

“You should also name executors, being confident not just in their abilities, but trusting that they will observe your wishes in situations where discretion is involved,” advises Booth.

“In some instances, it may be appropriate to give your executors latitude in considering tax-planning opportunities such as using the capital gains exemption on shares of a qualifying small business or farm property.”

Adds Booth, “There are lots of shades of grey in tax and estate planning, and your Chartered Accountant can help you consider various options.”

Brought to you by The Institute of Chartered Accountants of Ontario.

Credit: www.newscanada.com

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