On retiring from an engineering career at the age of 65, Hugh is starting to think about
Question:
On retiring from an engineering career at the age of 65, Hugh is starting to think about his current financial situation. His wife, Karen, passed away last year and he is thinking about his estate plan. Hugh has a son named Jim and he is 30 years old. Hugh has the following assets: • RRIF valued at $862,000 (Beneficiary: Jim); ACB $562,000 • Principal residence valued at $1,250,000 (Joint with Karen); ACB $600,000 • Whole life insurance policy with a face value of $200,000 (Beneficiary: Karen) • TFSA valued at $38,000 (Beneficiary: Karen); ACB of $30,000 • Cottage valued at $250,000 (Joint with Jim); ACB of $125,000
1. Calculate the probate fees that will need to be paid in the event that Hugh passes away?
2. Calculate the taxes that Hugh’s estate would need to pay in the event of his passing? Assume a marginal tax rate of 53%.
3. What three recommendations would you give to Hugh to minimize taxes and probate at death? Explain the benefits and drawbacks of each.
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0134141084
11th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs