FINA $348$ Case Study

Jerome is a $57-$year$-$old male who is a single widower with two children Marjorie and Maria. Jerome lives in the same house that he and his deceased wife lived in$.$ The house was originally his deceased wife$$s parent$$s home. The home is situated in Oakville, Ontario

Marjorie is $34,$ is married with $2$ children ages $4$ and $2.$ Marjorie and her husband Mike have been happily married for over $10$ years and live in Calgary Alberta. Unfortunately, Marjorie and Mike$$s second child, Freddie, is special needs.

Maria is $37$ and is in a same sex common law relationship with Deborah. Deborah has two minor children from a pervious marriage. Maria and Deborah live in a condo in Toronto.

Jerome$$s Assets

Asset FMV ACB

Home $$1,250,000$ $$750,000$

RRSP $($no beneficiary$)$ $$500,000$

TFSA $($no beneficiary$)$ $$105,000$

Non$-$registered portfolio $$375,000$ $$225,000$

Rrental Property $$650,000$ $$400,000$

$2023$ Jerome Income

OAS $$7\mathrm{.}500$

CPP $$9,600$

Pension Income $$60,000$

Net Rental Income $$15,000$

Total Income $$92,100$

As a financial advisor you have completed a retirement plan for Jerome. Both you and Jerome are satisfied that he has met his retirement goals. As a result, Jerome would like to talk to you about estate planning.

Jerome would like to pass his estate equally to his two children, Marjorie and Maria. Jerome would also like to make some provisions for his grandchild with special needs. At the same time, he wants to be fair to all of his grandchildren and make sure they receive an equal amount to that of Freddie. He would like to pass along $$150,000$ to Freddie as well as his other grandchildren. Jerome views Deborah$$s children in the same light as he does his grandchildren by birth.

As a financial planner list $3$ of your responsibilities when it comes to Jerome$$s estate plan. $(3$ marks$)$

What are the key documents that need to be created to successfully establish an estate plan for Jerome? $(3$ marks$)$

What type of POA needs to be established as it relates to Jerome$$s rental property? $(1$ mark$)$

List $3$ major issues that need to be addressed in Jerome$$s will. Please indicate how these issues need to be dealt with. $(3$ marks$)$

If Jerome where to die today what would the probate fees be as it pertains to settling Jerome$$s estate? $(4$ marks$)$

Which of Jerome$$s assets would flow through the estate? $(2$ marks$)$

Assuming Jerome$$s income remains the same in $2024$ as it did in $2023$ how much would Jerome$$s taxable income be in $2024$ if he died on December $31,2024?(4$ marks$)$

What type of trust$($s$),$ if any, would you suggest should be part of Jerome$$s estate plan? $(4$ marks$)$

How would these trust$($s$)$ be taxed? $(4$ marks$)$

Would these trust$($s$)$ be subject to the $21-$year deemed disposition rule? $(4$ marks$)$

What strategy would you use to equalize the estate amongst the grandchildren? $(4$ marks$)$

Why are you suggesting this strategy? $(4$ marks$)$