Reference no: EM132590027

Sander, 63, is reviewing his estate plan following the recent death of his wife, Mila. Sander has a life insurance policy on his life with death benefit of $350,000. His estate is beneficiary. His estate is also the beneficiary of his RRSP.

Sander owns the following assets:

Home in North York Cottage in Haliburton Non-registered portfolio              RRSP

Personal assets and car

FMV (in $)                   545,000                      350,000                    250,000        350,000       100,000

ACB(in $)                           83,000                       180,000                     120,000       N/A            N/A

Sander has started dating a younger woman who works in his bank. He has three daughters, ages 27, 35 and 37. He expects to live for many more years but, when he dies, he wants to ensure that each of his children shares equally in his estate. He also wants to structure his estate to minimize any costs associated with probate; but, in doing so, he does not want to expose himself or his estate to any long- term issues.

Sander lives in XYZ province where the tax schedule is:

• $5/1,000 to $50,000 and

• $15/1,000 thereafter

Questions:

Question 1. Under the current ownership what amount of Sander's assets are subject to EAT?

Question 2. Calculate the EAT that would be charged on Sander's estate if he died last night.

Question 3. If Sander namesh is three daughters as beneficiaries of his life insurance and RRSP,howdoes this impact the assets subject to EAT?

Question 4. Calculate Sander's new EAT assuming he makes the changes in question 3 above.

Question 5. Sander has three children and three significant assets: the cottage, the RRSP and the life insurance policy. Each is worth $350,000. One of his daughters would like the cottage; the other two have no interest in it. What are the implications of naming one daughter as the beneficiary of the life insurance policy, a second as the beneficiary of the RRSP, and bequeathing the cottage to the third?