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Worksheet: Children and your estate plan

Worksheet Worksheet

Use this quiz to get the conversation started about estate plans.

Questions – Circle the correct response.

1. A beneficiary can’t act as executor of a will.
TRUE
FALSE

2. A beneficiary can’t witness a will.
TRUE
FALSE

3. On assets like RRSPs and life insurance, you should name your children directly as beneficiaries.
TRUE
FALSE

4. For larger assets, such as a house, it’s best to name your children as joint owners.
TRUE
FALSE

5. If you name one child as the estate beneficiary and another child as an RRSP beneficiary, they’ll share an equal burden of estate taxes.
TRUE
FALSE

Answers

  1. FALSE – Beneficiaries are, in fact, frequently appointed as executors.
  2. FALSE – But there’s a twist. When a witness is a beneficiary under the will, or the spouse of a beneficiary under the will, the will may still be valid but any gift to them is void. So, it’s likely best to get an impartial third party to witness the will.
  3. TRUE – In some provinces, you can name a beneficiary for RRSPs, RRIFs, annuities and life insurance within the product. But make sure these designations don’t contradict what’s laid out in the will, because your named choice will override the will.
  4. TRUE – This is a common estate strategy, but depending on your situation it may not work for you. We’ll discuss whether it addresses your needs.
  5. FALSE – Debts and taxes owed by an estate must be paid by the estate before assets are distributed. So if your son gets the RRSP while your daughter benefits from the estate, the estate – and therefore your daughter – could end paying tax on your son’s inheritance.
Courtesy of Advisor.ca © 2018 Transcontinental Media G.P. These materials are for reference and guidelines only. You are responsible for the advice you give your clients.
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