Family Finance: What a retired man can do to protect his estate

                               

Problem: This widower, at 78 with a good living, wants to maximize the estate for his sons and avoid OAS clawbacks Solution: Restructure investment income to slash clawback exposure, gift assets to avoid probate tax. A widower we’ll call Philip, 78, is eager to preserve his wealth. He spent almost four decades working in the chemical industry, much of that time as a factory supervisor. A widower and a resident of Ontario, he wants to keep as much as he can of his nearly $1-million net worth for his two sons, Herb, who lives in Ontario, and Fred, who lives south of the border in Georgia.

Philip has no immediate financial problems, for his take home income, about $5,500 a month, exceeds his allocations other than savings by $3,015 a month. He has no debts and is in good health. Yet he is focused on what he considers his adversaries: current taxes and probate fees after he dies.

“I would like ideas on how to reduce probate fees for my estate when the time comes and also how to reduce my exposure to the Old Age Security clawback which eats up what I can give my sons,” he says.

Family Finance put these problems to Benoit Poliquin, a chartered financial analyst and financial planner who is lead portfolio manager for Exponent Investment Management Inc. in Ottawa, and Gregory Sanders, a lawyer and chartered accountant who heads the tax law group at Perley-Robertson, Hill & McDougall LLP based in Ottawa.

“Philip’s concerns are among the most common in financial and estate planning for persons approaching and beyond retirement,” Mr Poliquin notes. “It is very easy, even common, to fall victim to the OAS clawback when you have a work pension and several thousand dollars of Canadian source dividends.”