Estate Planning: Reflections Post-Confinement

Written by Louise Houle

A global pandemic is forcing us to rethink the fragility of our lives and health. Thus, there are many questions that may worry you.

Have you properly prepared the transmission of your assets, without leaving an unnecessary tax burden on your children? Have you planned who will take control of your business and who will be appointed to the board of directors of your operating or holding company? Have you updated your shareholders’ agreement? Finally, have you reviewed your estate planning and who will inherit your assets, considering that in North America, one out of every two marriages ends in divorce?

For those who may have neglected to put in place an estate freeze, the situation caused by COVID-19 has reduced the value of most companies. This is an opportunity to freeze common shares for the benefit of a family trust, without losing control of the business. This way, the post-COVID-19 capital gain will not be taxed in the event of your death.

For those who have acquired U.S. real estate or shares of U.S. public companies over the years, it would be a good idea to check whether your death would result in a payment of U.S. Estate Tax. Otherwise, your estate would have to pay an unnecessary amount to the U.S. Treasury within nine months of your death. If your hold more than $60 000 USD of such assets, there are the formalities related to the preparation of the US Estate Tax Return (Form 706-NA) as well as providing a valuation report for each property held at death. It is very easy to avoid all these hassles by planning well while you are alive.

Furthermore, in order to ensure a dignified end of life, it is important to leave clear guidelines in your protection mandate, which is a document that is too often neglected.

Finally, American statistics show that family life changes every five years. Therefore, it is important to ensure that your will reflects your current family situation and the marital situation of your children. In addition, it is essential to consult the chosen liquidators when preparing your will to avoid having them decline the nomination immediately after your death. In addition, if your liquidators now reside in the United States, Canadian brokerage firms and portfolio managers will not be able to accept stock exchange orders from non-residents. That’s why it’s important to keep your estate situation up to date.

If you are interested in reviewing your estate planning, we invite you to contact us.