When elderly parents reject estate planning - MoneySense

My parents are in their 90s with no estate plan. What now?

Nancy is an only child and her parents refuse to estate plan in order to reduce the taxes she would have to pay upon their deaths

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Q: I have a question about estate taxes. My parents are 90 and 93. My father still lives in the family home by himself and my mother is in Long Term Care and has end-stage dementia. I am an only child—separated but not divorced. I am in process of giving copies of Power of Attorney (POAs) to all the places where my parents have investments so that those places at least know I exist and can put a name to a face.

My parents have never been forthcoming with me about their finances. The one advisor I went to told me that he had tried to get my parents to put my name on the deed to their house and all of their GICs (that’s all they have) so that I won’t pay as much tax. My parents were not willing to do this. Is it advantageous to bother trying to do this or not? My financial situation in the past has not been great, having gone through a bankruptcy 20 years ago. Everyone seems to have a different version of what taxes are paid/not paid. Can you clear this up for me?

—Nancy

A: Dear Nancy, adult children hope their parents did whatever possible to reduce estate taxes. This seems obvious to you as their only beneficiary. Here’s why it may never have concerned your parents. Parents may not want to increase their risks to maximize your net benefits.

Tax-reducing strategies can be simple but create complex headaches. Finding advisors who can simplify and explain tax issues is difficult. Dealing with assets through wills or trusts, designating beneficiaries, and joint ownership raises complex tax issues that are ignored. There are significant costs and risks to follow some tax strategies.

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Estate planning can reduce provincial estate administration or probate taxes. There are also federal income taxes paid to Ottawa. Your parents may not be interested in taking risks or making difficult choices. Your mother in long-term care has mild dementia. She may not be able to change her will, make estate or tax plans. Your parents may have waited too long to plan their estates.

Your parents may never share financial information with you for good reason. Many people struggle sharing financial information or burdens with family. It may seem like the right thing to do.

You were separated from your spouse and had prior financial difficulties. Your parents may never have raised their concerns about their personal financial needs or long-term plans.

Your parents may not have added your name to their assets because they had concerns about your financial difficulties. Your separated spouse could make potential claims to their property. This could happen if you predecease them. If your separated spouse raised claims to assets you owned with your parents, they could end up losing control of their own assets.

Paying provincial probate taxes may be the price parents pay to keep control over their finances and future. Changing ownership to reduce tax for the next generation is not always their priority.

Ed Olkovich is a Toronto lawyer and certified specialist in Estate and Trusts Law

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