Margin Accounts

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The living trust is a legal document created by the grantor during your lifetime. The purpose of the living trust is making the client’s estate planning and fulfilling the desires with regard to the grantors’ dependents and heirs which are similar with wills. While the big difference between these two documents is that a will becomes effective only after the grantor die and the grantor will has been entered into probate. Comparing with the will, a living trust is more efficiency and economical. Obviously, the living trust bypasses the time-consuming and costly process of probate, enabling the grantor’s successor trustee to carry out he/she instructions as documented in his/her living trust at your death, and also if the grantor unable to manage your financial, healthcare, and legal affairs due to incapacity.

Therefore, after considering the points above, a living standard is a good choice for the client at this case.

3. The third strategy is reducing the tax through gifting. It is extensively acknowledge that when we consider a financial problem, the future value is a significant part. In estate planning, we also would be well-advised to consider the future estate taxes. Gifting is, probably, the oldest and best way to minimize future estate taxes. And for the wealthy, minimizing the estate taxes through gifting is smart planning. According to this case, we can see that the client has a spouse and three children, and she wants to leave money to the charity. Although we do not know the accurate financial situation of this family, we can indicate that the family is at least middle class since we cannot image that the poor family puts their money into charity when they have three children. Specifically, the client makes exclusion gifts every year to as many family members (i.e. her spouse and three children) as is financially prudent is good planning. After the long-run, the client can transfer significant sums of money out of her estate along with any appreciation, so that reducing tax.

4. The last and not least strategy is keeping track of accounts and important information. In addition, it is really important to communicate the estate plans to a family member or someone you can trust. Not only is it important to share the plan with someone, but also be very helpful to document the plans to help eliminate any potential misunderstandings. It is also beneficial to the smooth execution of your estate plan.

2. Discuss the tax consequences, if any, for each of your recommendations.

The major tax consequence is that people may involve in capital loss. Therefore, the core question is that how to avoid more capital loss. The key is to reduce the value of your estate.

The simplest way is to ensure you have designated beneficiaries for registered retirement savings plan (i.e. RRSP) ,registered retirement income funds(i.e. RRIF) , annuities, life insurance policies and guaranteed investment certificates(i.e. GICs) issued by insurance companies, whenever possible so that assets do not form part of your estate.

Question5:

Part A

1. I disagree with this statement. Because according to provincial law, a people in Ontario died without a will, if he had a wife and 2 adult children, his first $200,000 is to spouse; rest 1/3 to spouse and 2/3 to children, but not automatically go to his wife.

2. I agree with this statement. According to provincial law, if there is no will neither living heirs in Canada, all the assets will go to the government.

3. I disagree with this statement. A holographic will is no witness necessary and valid in most provinces, what’s more, an standard will needs at least two witnesses, and the witnesses can be people other than their spouse or beneficiaries.

4. I disagree with this statement. This is a testamentary trust, and there are immediately income tax consequences when assets are transferred to the adult children, and income taxes are owned by the children.

5. I agree with this statement. Because this is a non-probatable asset, it can directly to other individuals( beneficiaries) on your death and save executor and avoid probate taxes.

Part B

3 major differences between a Power of Attorney over property and a will

1. The power of attorney is only applicable while the person is still living but incapable of making their own decisions, while a will does not have this situation limit.

2. A will is a written document in which the testator decide how his estate is to be distributed after his death while the power of attorney over property is that the person give one or more people power to manage the person’s property.

3. Attorney can do anything the grantor could do but have exceptions while the will is made from the testator, no limitations needed.

Question 6

A).The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation created by Parliament in 1967. The main purpose of this institution is that provides investors with member financial institutions against any loss on their deposits. CDIC is not a bank, and also, CDIC is not a private insurance company.

b). 1.The CDIC insures savings account,

2. Chequing accounts,

3. GICs or other term deposits with an original term to maturity of 5 years or loss,

4. Money order,

5. Certified cheques

6. Bank drafts issued by CDIC members.

c). 1.The CDIC excluded any type of foreign currency, including U.S-dollar accounts;

2. GICs or term deposits that mature more than 5 years after the purchase date;

3. Government bonds;

4. Treasury bills;

5. Mortgage-backed security investments,

6. Stocks and mutual.

d).

1. Joint deposits (savings held in more than one name). The couple will receive $75,000 from the joint account.

2. Savings held in trust for another person, CDIC would pay another $75,000.

3.

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