Estate Planning

Estate planning is a broad term that encompasses more than just one’s “estate.” It involves the arrangement of a person’s affairs to ensure that, on incapacity or death, all financial and other affairs have been arranged to ensure their wishes are followed, including:

Honour what they lived for not what they died of

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Many of us do not think of the Church when it comes time to choose an in-lieu-of-flowers designation. Research shows that when we make an in-lieu-of-flowers selection for a loved one who has passed away, we usually select charities associated with their death. In other words, we make our decision based on what our loved one died of, and not what they lived for.

Of course none of us diminish the need for the important work being done at research foundations for diseases and of other charities. A lot of good progress is being made. We may simply wish to consider the Catholic Church as our in-lieu-of-flowers option and have the opportunity to recognize the importance of faith in our lives and the lives of our loved ones. An in-lieu-of-flowers mention in an obituary presents a wonderful opportunity for us to tell our family and friends that the Church is important to us.

One such example is Sir Louis H. Parsons who is remembered by his children as a hardworking man who was kind, generous, ethical and trustworthy. His family says that the greatest lesson they learned from him was that “Everything in life worthwhile requires sacrifice.”

At the time of his passing, his children directed the in-lieu-of-flowers donations to honour him by establishing The Sir Louis H. Parsons Memorial Scholarship Fund at Toronto’s St. Michael’s Choir School. The purpose was to help ensure that his love of the Choir School and community would remain in perpetuity. Donations collected were designated to the scholarship fund given every year to a student who exemplifies leadership and the qualities of humility and service to others. This fund has created a legacy for Sir Louis H. Parsons that will live on for many generations.

Creating your own in-lieu-of-flowers legacy is easy and can be directed toward your parish or favourite religious charity. It may not fund a parish renovation or solve the needs of the poor, but having the choice of supporting the Church in a big or small way indicates that the Church is a fundamental part of our lives.

And we place our trust in Jesus to do the rest.

If you would like to choose your parish or favourite Catholic charity as your in-lieu-of-flowers designation consider sharing your decision with your family. This will help to ensure that your wish is fulfilled. You can also write down your intention and keep it with your Will.

(Foronda works with the Development Office of the Archdiocese of Toronto.)

Spreading generosity changes everyone

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“My father is waiting for me, I have to go home,” said Victoria, an elderly woman with Alzheimer’s disease.

She was participating in a senior’s bingo game in Scarborough and talking with a 12-year-old boy with autism named Joseph.

Joseph, accompanied by his Uncle Sam, had been volunteering at the bingo game every Wednesday for the past three years. Over that time he’d forged a special relationship with Victoria.

“Victoria loves Joseph,” said Sam. “She gets really upset if Joseph is not here and does not want to play bingo. I think it’s because her father’s name was Joseph.”

Sam, a manager of a grocery store, knows the importance of volunteering and is determined to teach Joseph that you don’t have to be paid for everything you do. Managing his staff has taught Sam that a generous person is a far better employee than a greedy one. So he believes that teaching generosity to Joseph will help the boy in his life and future career.

Learning the importance of giving back, Sam believes, can change someone’s outlook on life. He learned that lesson from a Grade 11 teacher.

“My teacher said that whoever went on a weekend retreat on the importance of volunteering would get an A in her class,” he recalls. “I liked the idea of getting an A, so I went. It had a huge impact on me and made a real difference in my life. I didn’t realize it at the time, but only being 15, I was young and impressionable. It made me a better Catholic.”

One way that Sam gives back today is through a life insurance policy from the Knights of Columbus that names ShareLife as the beneficiary. A gift of insurance can be a wonderful way to create a legacy for your parish or favourite charity. Here are three simple ways you can make a gift of insurance:

o You can purchase a new policy and name the Church as the owner and beneficiary of the policy. This entitles you to receive a tax receipt for the annual premiums.

o Alternatively, you can be listed as the owner of the policy and name the Church as the beneficiary. This method lets your estate receive the tax receipt at the time of death,

o Finally, you can gift a policy you already own, naming the Church as the owner and beneficiary, and receive an immediate tax receipt for the fair value of your policy. You then continue to pay the premiums and get a tax receipt.

It’s never too early to plan your final arrangements

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TORONTO - George Ribeiro knows where he’s going, and that’s a load off his mind. By pre-planning his cemetery arrangements, the 62- year-old businessman has secured a plot in Assumption Cemetery in Mississauga.

Ribeiro was nudged in the direction of making his own funeral and cemetery arrangements when his father-in-law died this year.

“When he passed away, me and my wife had to organize the funeral — and not just the funeral but also the cemetery part. In one day we had to do basically everything,” Ribeiro said.

That’s not a stress Ribeiro would wish on his own adult children. From memorial stone to casket to location, all those decisions have been made. When the time comes the Ribeiro family will concentrate on prayer, grief and hope rather than payments and trying to guess their parents’ wishes.

“We tend to be afraid of dealing with the funeral part of our lives,” Ribeiro said. “When we do it, if we don’t have big pressures it’s much better than a last-minute situation that we have to solve.”

Ribeiro believes that by pre-planning, his family will end up spending less.

“If you don’t organize it before, what happens is that normally you spend even more money,” he said.

Nobody wants to do less than the utmost for their own parents, and that can lead to poor decisions and costly extras, said Ribeiro.

Dealing with Catholic Cemeteries — Archdiocese of Toronto family counsellor Rosa Felgas, Ribeiro found the process surprisingly easy.

“I think it was a very nice experience,” he said.

Family counsellors can help work out a budget, arrange for interest-free monthly payments, secure a reserved burial plot and assure co-ordination between the funeral home, parish and cemetery. Family councillors will also make home visits for people unable to get to Catholic Cemeteries’ offices. Group presentations are also available.

As a Portuguese immigrant, Ribeiro saw the planning process as normal. His grandparents in Portugal secured a family plot many years ago.

“Back home, it’s the way it is. You know you have to prepare.”

At 62 Ribeiro could well live another 25 years or more, but he doesn’t think he moved too soon to secure his burial plot.

“If I go today or tomorrow or 20 years from now, it doesn’t matter. I know where I will go,” he said. “You never know when is going to be your time and how it’s going to be. There should be a way of talking to people. I think we should normally do it earlier.”

Preparing your funeral in advance takes burden off of your loved ones

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When facing death there is a lot a family must manage: grieving, estate finances and, often overlooked, the funeral service arrangements.

“Pre-planning is one of the most thoughtful gifts that you can give to your family,” said Amy Profenna, spokesperson for Catholic Cemeteries — Archdiocese of Toronto. “When arrangements are made in advance of need, it allows one to focus on the important things at a time of death.”

While pre-planning is preferred by Profenna, she understands that health issues and sudden deaths — as well as people not accepting that their time is near — often leave the task to those close to the deceased. This reality is what prompted the Catholic Cemeteries’ team to publish Life is Changed, Not Ended: Planning and Preparing a Catholic Funeral in 2008.

“We worked with Novalis to customize this booklet which was created to help family and friends prepare a Catholic funeral,” said Profenna. “It contains all the readings for the funeral Mass from which the reader can choose, and offers all the themes for the vigil celebrations.”

The booklet opens by addressing a variety of common questions surrounding children’s role in the Mass, prayers for victims of suicide and, one of the most popular misconceptions, preparing the eulogy.

“Although the Catholic funeral Mass is an opportunity to remember the person who has died, it is a celebration of the saving mystery of Christ’s death and resurrection,” reads the booklet. “That is why a eulogy, which is a speech praising someone who has died, is not part of a Catholic funeral. It is important in the grieving process, however, for people to share memories.”

It recommends doing so at the wake, the vigil for the deceased or in private with close friends and family. Additionally the booklet explains, using similar reasoning, “why secular readings and songs don’t belong in a Catholic celebration — not even a favourite poem or song.”

Knowing all of this in advance can help reduce tension when sitting down to plan a funeral.

“Plan to take time to sit down with the parish priest or a member of the pastoral staff to discuss the details of the rites,” reads the booklet. “Share information freely and discuss any special wishes you may have.”

Profenna admits that spending a couple hours talking about your own funeral service, or that of a recently deceased loved one, can feel morbid, depressing and even terrifying, but the end result is almost always worth the discomfort.

“After people have made their arrangements the feeling is generally the same, the feeling of satisfaction, like a weight is lifted and the feeling that they are glad they did it,” said Profenna. “The most important part is that peace of mind people feel after making their arrangements.”

Charitable estate planning in 60 seconds

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A simple way to reduce your tax burden through giving

The average person should be able to read this in 60 seconds.

Here is a simple idea on how you can combine a portfolio of securities, charitable giving and the reduction of your estate’s tax burden.

The government does not require you to pay capital gains on securities that have gone up in value if you gift them directly to a registered Canadian charity. Many people do not know that the archdiocese of Toronto is able to receive gifts of securities for all our 225 parishes and archdiocesan charities.

If you are considering a gift to the Church in your Will and have a portfolio of appreciated securities, consider gifting them directly to the Church instead of selling them and then donating the cash. This could help save your estate capital gains taxes. Talk to your lawyer about how to draw up the instructions for your estate trustee to do this as this simple strategy could help save your estate a lot of money in taxes.

A helpful hint: When drafting your Will make sure your lawyer has the proper legal wording if you intend to include your parish in your Will. If you attend St. Patrick’s parish, for example, the proper legal title would be: Roman Catholic Episcopal Corporation for the Diocese of Toronto, in Canada for the benefit of St. Patrick’s parish. Because the archdiocese has eight St. Patrick’s parishes, the proper mailing address needs to be included to ensure that your gift goes to the right place.

Have your lawyer contact the archdiocese beforehand to request the proper legal title. Call (416) 934-3411 or e-mail development@archtoronto.org.

Wills and Codicils — what you need to know

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We are all familiar with the term “last Will and testament” but the term “Codicil” is less well known. Derived from the Latin “Cōdicillus,” which means “a little book,” a Codicil is a document that amends a Will.

A Codicil must follow the same formalities as a Will. It must be in writing. Unless it is entirely in the handwriting of the testator or the testatrix (the person making the Will), it must be signed, dated and witnessed by two individuals in the presence of the testator/testatrix.

After an individual makes a Will, he or she may wish to change the Will. Circumstances may have changed or assets previously bequeathed may have been sold. Rather than have the entire Will re-executed, individuals often use a Codicil if the change is small. However, with document processing technology, Codicils are becoming less popular.

Before document processing, Wills were typed. Because of the strict rules regarding the formal execution of a Will, there could be no typographical errors. If an error occurred, the entire page would be retyped.

Otherwise, manual change would have to be initialed by each of the testator/testatrix and the witnesses.

For that reason, it was common to make small changes by Codicil.

Is it Ever Appropriate to Use a Codicil?

There are times when it is never desirable to use a Codicil. These include:

o a change of the guardians or custodian nominated for children;

o a reduction of a bequest;

o removal of a beneficiary.

These are decisions that will inevitably cause embarrassment or hurt for the person removed or excluded.

Rather than have disappointed heirs fretting over what conduct precipitated the change, it is more appropriate to simply do a new Will. Only the last Will is made public. No one need know that another person was selected as a guardian or a legacy was reduced or revoked.

Codicils Precipitating Will Challenges

A change could precipitate a Will challenge. It is not uncommon for excluded individuals to challenge the Codicil on the basis that the change was made based on inaccurate information or on the grounds of duress or undue influence. This could be avoided if the affected individual was unaware that a change had occurred.

Making your Own Codicil

If the change is small, an individual might be tempted to prepare a Codicil where there is an emergency or a lawyer is not available. For example, if someone is in imminent fear of death and was in a remote location, he/ she could prepare a handwritten document to make a change to his/her Will.

Individuals should not make changes to a Will without consulting a lawyer. Lawyers’ fees for preparing Wills are modest compared to fees for contested Wills. Homemade Wills and Codicils are a great source of litigation.

Recently, individuals have prepared Wills or statements of testamentary intent on their computers and send them via e-mail. While a handwritten document will be accepted as a holograph Will, an e-mail or an electronic document is not acceptable, as it has not been signed and witnessed and there is no way to verify that the document was typed by the owner of the e-mail address.

Finally, we have all seen on television a video recording made by a testator/testatrix who wishes to address his/her beneficiaries after his/her death. Video Wills are not acceptable or admissable either as Wills, Codicils or “explanations” to either. The safest way to change a Will is to use a lawyer who will either prepare a new Will or, more rarely now, a Codicil.

(Rocchi is a Partner at Miller Thomson Law Firm.)

Proper planning ensures your legacy

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After a lifetime of diligent saving and investing, many Canadians find themselves in the fortunate position of being able to support those charitable endeavours that they deem most worthy. Supporting charities is a distinguishing trait of Canadians among global economies, and we are ever-ready to lend a helping hand when there is need.

The methods by which Canadians can support their charity of choice have broadened over the past few years, and we now have the opportunity to be even more generous while receiving more tax incentive than ever before. One of more popular strategies is the designation of a charity as the beneficiary of a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF). This allows donors to receive income during their retirement in a tax-efficient manner, and then pass on the remainder of their retirement accounts to their chosen charity.

If an individual designates a charity as the beneficiary of their RRSP or RRIF, there are a few key points to remember:

o The proceeds from the RRSP or RRIF can flow directly to the named charity after the donor passes away, avoiding the delay of probate and the cost of executor fees. Many banks or brokerages will not withhold taxes at source, so the entire amount of the RRSP or RRIF will be donated.

o The funds which flow from the RRSP or RRIF to the charity will still be reported as income to the donor in the year they pass away, and there will be taxes owing. The estate will be able to claim the charitable donation on the final tax return, which will offset the tax liability. The example below illustrates this in more detail.

o The donated amount can result in a tax credit of up to 100 per cent of your net income in the year you pass away. This means that designating an RRSP or RRIF to charity will result in zero tax liability in most cases.

To illustrate these key points, take the example of Andrew, who has designated his parish as the beneficiary of his RRIF. His RRIF is comprised of stocks and bonds valued at $100,000 at the time of death. This means that if Andrew is in the top tax bracket, he will have taxes payable of $46,400. The donation will allow his estate to claim a tax credit of $46,400. Thus, Andrew’s parish receives the benefit of his donation, and Andrew’s family and estate do not incur any tax payable because of his generosity.

Proper planning can ensure your philanthropic goals are met and you get the benefit of tax incentives to reward your generosity.

Parishioners’ bequests help St. Cecilia’s to raise the roof

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TORONTO  - Struggling with parish finances, Fr. Joseph Tap Van Tran needed money for restorations at St. Cecilia’s Church in Toronto’s west end. His prayers were answered through substantial bequests from various parishioners totalling approximately $800,000.

Due to this generosity, the parish is getting a new roof along with exterior work, such as brick work on external walls, stone work around the windows and restoration of the front stairs.

Nestled between houses near High Park Avenue in the Junction, the church is immersed in scaffolding, a testament to the help of bequests.

“It’s a blessing that we got the donations,” said Tran, pastor at St. Cecilia’s Church and The Mission of the Vietnamese Martyrs, a community that shares the parish.

“St. Cecilia’s is not a rich parish. The financial resources are very limited. We would not be able to repair the roof, which is a major renovation, but with the money from the bequests we are able to do it.”

One particularly large bequest came in the form of a house, along with all of its contents, said Tran. Everything was sold and the funds are being given to the parish.

Upon hearing about the large bequests from members of the community, Tran said he felt joy and a strong sense of thankfulness to both God and the donors.

“As Catholics, we know the church is the house of God,” he said. “It’s the place we experience God’s love and experience His presence in a special way.”

Established in 1895, St. Cecilia’s is a fairly old parish, said Quentin Schesnuick, manager of planning giving and personal gifts at ShareLife.

For parishes that need major work done, bequests can go a long way.

“You get a few gifts in your will and what happens is the parishes can go ahead and do the projects and (renovations) to repair the parishes for the next generation,” he said.

Pre-plan dividing up your estate to avoid problems

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Make sure special items go to the person to whom it means the most

A funeral is a time that should bring people together, not drive them apart. Unfortunately we have all heard sad stories about how arguments occur while people are grieving. It is especially sad when the arguments are over material possessions of the person who has passed away, over who should get what.

We all have something that reminds us of a loved one. Perhaps it is a special broach that grandma loved, a weathered ring that reminds us of our father’s strong oversized hands, a dining room table that the family always used on special occasions or a gold necklace that our mother wore every day.

Attachments don’t always have to be logical, except of course to the person who has the attachment. A parishioner, who we’ll call John, once told me that he had a special attachment to a juice container. His mother had the same juice container for more than 30 years. Every day during his childhood he had a glass of juice out of that container. Eventually he got older and moved away from home to start his own family. But the juice container remained. And every time he returned to visit his parents he would open the fridge and pour a glass of juice out of that same container. It reminded him, perhaps in an unconscious way, of his childhood.

One day, John went home, opened the fridge and saw right away that the juice container was gone. He asked his mother, “Where is the juice container?’

His mother replied, “Oh that old thing? Your sister wanted it, so I gave it to her.”

John’s immediate reaction was one of annoyance. He felt that a wrong had been done to him. Why should she get the juice container? And while he didn’t let his mother know, John must have revisited that annoyance every time he visited his sister’s home and got something out of the fridge.

If John could get emotional over a piece of plastic at a time when he was level-headed, imagine what could happen if a similar event occurred during an emotional time — such as during a funeral. All it would take is one careless word during a difficult time and a relationship could be strained — or worse — damaged.

Spare your loved ones this.

One way you can help is to consider asking each family member if there is something of yours that they are especially attached to. Wait until the moment is right and then ask the question simply and plainly. If siblings both name the same item, then ask if there is something else that means a lot to them.

Once you have gathered all the information, and when everyone is together, have a conversation to share with them on which specific items you intend to give to whom. This way everything is out in the open. Of course you do not want to start dividing up all of your possessions, just those few special items that mean something to each loved one.

And keep the conversation light. Ask why they like the item so much. Who knows, perhaps some good memories will surface and you will share a few laughs as you reminisce about good times. And you may learn something you never knew before.

Gifts in kind are sometimes not so kind

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Grandpa’s stamp collection, your first car, a box of beat up old coins, a comic collection from the 1980s, crystal figurines in a living room glass display, a really old pocket watch and great Aunt Betsy’s tarnished tea set all have one thing in common…

The owners usually believe their items are worth more than they really are.

Chances are we have all imagined having the “big win” that we occasionally see on TV shows like Antiques Road Show. Especially when we have invested time into collecting something we care about. We naturally think that others will recognize the same value we place in it.

One gift I especially remember handling for the archdiocese of Toronto was from a parishioner who was gifting to their parish a mid-1990s Jaguar. The car was beautiful. It really was. It had only 74,000 kms, was driven in the summer and for the most part was stored indoors for the winter. The person donating it was the first owner. The car had never been in an accident and the interior was immaculate. The donor was in his late 70s, had all the servicing records and took really good care of it. He had moved into a condo downtown and no longer wanted to drive.

For various reasons we had to sell the vehicle to a dealer. We got $3,500. And while the donor did not mind (he knew well in advance), I must admit that if it were not for that pesky little thing called “a conflict of interest,” I would have bought the car.

The best part of the transaction was when the dealer who was buying the Jaguar told me to call him right away if I ever got a hold of a mid-1990s Volkswagen Jetta that ran on diesel. It seems construction people really like them because the same diesel that goes into the equipment can go into the car. We could expect to fetch a few thousand more for the Jetta than what we got for the Jaguar.

It can be a hard, cold world.

Another interesting gift was a collection of old stamps. There were two big books of them. They looked very old and really valuable. Using a contact in the numismatics and stamp collecting world, we were able get the collection into an auction. The collection fetched less than $500. The dealer who facilitated the sale told me that if we ever got a hold of some Chinese stamps that depicted the Cultural Revolution to give him a call as they are “hot.” It seems there are some wealthy Chinese business persons who like to use stamps to diversify their wealth.

The key to valuating a donation for gift in kind purposes is not what we believe the item is worth, or even what an insurance appraisal says it’s worth, but what the item is worth in a free and open fair market. The Canada Revenue Agency sets a guideline surrounding this. If a gift in kind is made, either in life or through a Will, the tax receipt will be for the fair market value. A good example is a diamond ring. While there may be an appraisal for insurance purposes that says it’s worth $10,000, if potential buyers on a free and open market are only willing to pay $5,700, then the tax receipt will be for $5,700. This is the fair market value.

There is a way that you can check to see what your gift in kind may be worth for receipting purposes. Try going onto ebay.ca or Kijiji.ca and watch an online auction to see what it (or a very similar item) sells for. Do this a few times, average the amount, and then you will have a pretty good idea as to what you can expect your tax receipt to be.

If you don’t like what you see (or do like what you see) consider keeping the item in your family. An old Coke machine in the basement or a well-framed Olympic pin collection may look better in a family members’ basement than a tax receipt for a few hundred dollars.

But who knows? Perhaps you do have the special item that is one of a kind. I once handled a painting that sold in auction in London, England, for more than $100,000. I knew we were on to something when three people showed up to see the painting with white gloves and an ultraviolet light.

One never knows!

(Schesnuik is the Manager of Planned Giving and Personal Gifts for the Development Office of the Archdiocese of Toronto.)