Settle For More

Volume No. 1 No. 1 (March 2020)


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Enlarging the pie can be the difference between settling estate litigation and a lengthy court battle.  But how do you increase the size of the pie when there is only so much filling to go around.  You make sure the tax departments don’t eat too much.  Good tax planning can increase the chances of settling.

But don’t confuse tax planning with tax return preparation.  Determining what estate tax returns are required and how they should be filed takes experience but if it is the extent of the tax advice you obtain, the government could well be sharing too much of the pie.  For example;

  • Will the settlement of a dependant’s relief claim create a deemed sale of the other beneficiaries’ interest in the estate? Will a trust created in settling a dependant’s relief lose testamentary status, resulting in significant unexpected tax on settlement, ineligibility for Qualified Disability Trust benefits and higher than expected tax rates in the future?
  • Will your planned variation of the will create a disposition of the testamentary trust and a resettlement of a new, inter-vivos trust? Will the old trust be deemed to sell assets to the trust created by the variation?
  • Did that change of trustees you just agreed to, or the appointment of an ETDL, create a change of control of a company owned by the estate?
  • Can you just split up an investment company between siblings?
  • Is it fair that the estate and all its beneficiaries pay the tax on property jointly held by the deceased and one of the beneficiaries? Can this tax result be avoided so the liability is shared more equitably? 
  • Is it only children under 18 who can benefit from certain rollovers because of “financial dependence”? How do you determine if the CRA will agree that someone was financially dependent?  Did the person have to live with the deceased?
  • What deadlines are required for post-mortem planning, rollovers and other estate matters and what if litigation precludes meeting them? 
  • Do you have to worry about a beneficiary’s US citizenship or Greencard status? 

The questions are almost limitless and often not asked, or are asked too late.  Consideration of the tax implications of your options has to be performed while you are assessing them; not at the mediation table.

At Cadesky Tax, we fill the tax advisory gap between litigation and tax return preparation.  How?  By bringing results driven tax specialists, respected by trust and estate practitioners, to your team.  But it’s hard to create solutions if we come to the table too late in the process.  Tax issues arise in every settlement scenario and success depends on understanding the issues and options every step of the way, not just when a settlement is proposed, or at mediation.

Where you can’t settle, your chances of success at mediation are enhanced if your team includes an estate tax specialist who has been consulting on the tax aspects of the litigation throughout the process.

At Cadesky Tax, we know trust and estate planning.  We know trust and estate litigation. We know you shouldn’t “settle for less” when you can “settle for more”.