Wednesday, April 23, 2008

Death With Taxes

There are only two things certain about life.
Now a year after my father's passing, we are still settling the estate.

Mom and dad were not realistic about their money. They lived through the depression and, except with their children and grandchildren, were always worried about stock prices and the natural ebb and flow of the market. Retirement investments are meant to be long term. You will drive yourself nuts if you have a good financial advisor and yet worry every time you get a new statement.

What would have benefitted my parents was some estate advice: knowing that my husband and I were going to buy my brother out of his share of the house, would have been great if we had settled that earlier. As it was, for a simple paper exercise: to transfer the assets from my late mother to my father's name, cost us a percentage of his money. Money that had to be cashed in. It was a silly money grab from the government, as this was taxed money, in terms of income.

Unfortunately, my parents did not make my brother or myself the executors. It was funny that my parents never seemed to think of us as adults, and in 1995 (when I was in my 30s) they wrote a new will and my older cousins (named executors in the will) had to be involved in the estate. My cousins did not want the responsibility and removed themselves from the equation.
I ended up acting as executor. The estate was simple: my brother and I divided all of the assets.

We agreed on what had to be done, I kept him informed all of the way. It is not always so simple with families and it is up to those writing a will to explain it to family members before the fact. Emotions run high and it is easy to enter into conflict -which is what a will is supposed to prevent.

My father lived 45 days or so in 2007. We have to file personal taxes for him for that period of time. We saved every medical bill, drugs, therapy, trips to the city for treatments, lodging, etc., and this is tax deductible. Of course, with all of his assets in RRSPs, all of these things have to be cashed in and tax receipts and capital gains listed. Once his assets were cashed in, we then have to file a tax return for his ESTATE. None of this is simple. Canadian tax laws, as with many countries, are best interpreted by a professional. We have sought the assistance of an accountant to help us.

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