Settling of an estate

[jdmXSI]

Well, long story short it is getting to that time were our family should start planning this.

A quick run-down on our current situation.

My Grandma is still alive but we are not sure for ahow long as her health has deteriorated quite a bit recently. She is now in the hospital and is needing to either go to a nursing home or a place with an Alzhiemer's/ Dimentia ward. What brought this up was a Nurse had asked us what level of care they we want for the hospital to provide for my Grandma should something happen (do everything to keep her alive, use the paddles or just a strait forwad DNR...).

Now she has a house that is fully paid off and this is where the questions start.

1) Will it be eaiser to sell the house before she passes?

2) If we decide not to sell the house until she passes, will we pay (either as inheritance or the estate) capital gains tax?

I only ask because a colleague my girlfriend works with had to pay +/-$80k in taxes when one of his family members passed because they could not sell thier house in time. I have also spoken to my Grandma's Lawyer and he told us not to worry either way as it would be considered an inheritance and we would not get taxed. Maybe someone could shed some more light on this for us as we just want to avoid as much brain damage as possible.



TIA

[lilmira]

It's definitely easier to sell or transfer the ownership to the children when the person is alive. But this is obviously not without problems of it's own.

There is no inheritance tax in Canada. So nothing I guess.

I'm not sure how it goes if the value of the property goes up from the date the person dies to the date the property is sold. That could be capital gain I assume. You shouldn't have to pay anything keeping the property though.

You do have to take care of tax, loans and such for the deceased. May be that's what she's talking about.

[jdmXSI]

Thanks for that, the info is appreciated!

Another question comes to mind, if you sell a property for $400k but the citys tax assessment is $250k for the property. Would you have to pay capital gains even if it is fair market value?

[Sugarphreak]

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[spikerS]

take my advise on this, i speak from experience from when my dad passed.

Get ahold of your grandmother'w will NOW. If she does not have one, get the family together, and everyone sit down with her. Not having the will will only make things into a HUGE headache down the road, even if the family is amicable. Even though wills can be contested, it is 1,000,000,000,000,000,000 times better to have the will.

The sooner your family has it in their hands the better. That way you all know what your grandmother wants, and can adhere to her wishes.

When my father passed, he did not have a will, and was having some financial issues. It was such a huge headache for me. my siblings and I had to fight with family that my father had no contact with for 20 years trying to do as my father wanted, and it was a nightmare without the will. I already have a post up about me wanting to move my fathers ashes since I could not afford to stop it when he passed.

I can't stress it enough, find the will NOW or have her make one NOW with the assistance of as much family as possible so they are all witnesses to what she wants and can't argue it later.

[triplep]

Originally posted by jdmXSI
Thanks for that, the info is appreciated!

Another question comes to mind, if you sell a property for $400k but the citys tax assessment is $250k for the property. Would you have to pay capital gains even if it is fair market value?

No it has nothing to do with what the city assess the property at. It is the Fair Market Value which the CRA cares about.


From what I remember, there doesn't have to be a will, but if there is it saves a ton of head aches. If the estate is <125k then you technically don't need a will etc. If it is over you need to get it probated. Which is the courts deciding what is going to happen, and it can take a few months for this to happen, and I assume some money.

[lilmira]

Yeah, it's definitely easier if there is a will. It will be done a lot quicker than without.

It happened to my family back home where there is inheritance tax if the estate is more than a certain amount. That's when the tax people get interested and they want to know every single dime counted.

Sorry, it's my bad, I read more about it in Canada, it's similar here. While you don't pay tax on inheritance, the estate has to pay tax, duh! So if the estate is quite substantial, expect the Revenue Canada to be on it like a hawk.

[dezmarez]

Best course of action would be to go see a lawyer.

Take the will there.

Just a couple things in regards to estates...

When she does pass away, her house shouldnt be taxed, as this is her principle residence, and she wouldn't be taxed on that, therefore the full amount should be passed on to her beneficiaries without tax.

Any registered investments will be taxed.
Any other property that has appreciated in value, the estate will have to pay tax on it.

Another thing, if the estate is going to be probated (which is most likely the case since there seems to be a property involved) then there is a cost for that. In Alberta, (from what I recall) the cost is a flat fee of $400.

Other provinces have different rules in terms of how much probate costs. If you don't know what probate is, it is essentially the government recognizing the will as valid, and allowing the executor to act on it.

If there is no will in place, someone will have to go to the government and apply to be the authorized representative of the estate.

Dying without a will is very complicated as the government of Alberta has specific rules on how an estates is to be divided up.
See here....http://www.google.ca/url?q=http://rgafinancial.com/articles/Estate-Planning.pdf&sa=U&ei=Au94TrjtD-LY0QHb9IWJDA&ved=0CBoQFjAE&usg=AFQjCNF3zmcN7pvm0usCbcpRZUQ8ti6gLQ