How grandparents can use RESPs to open doors of opportunity

A great deal of financial success comes down to executing the basics well. In this series called Investing Basics, we review some of the fundamental tools that can help you and your family build and protect wealth over time. In this installment: the power of RESPs, especially for grandparents.

Many grandparents are unaware that the total cost of a four-year degree at a Canadian university in 2023 is about $100,000. This includes tuition, books, supplies, housing, meals, travel and $125 for the traditional sweater to represent their university, faculty or program.

The cost of university has risen sharply, and so has the importance of graduating with a marketable set of skills and knowledge. Without a post-secondary education, employment and life opportunities are more limited now than ever before. Contributing to a grandchild’s education can open doors of opportunity and help you stay connected in a meaningful way.

Registered Education Savings Plans (RESPs) began in their current form in 1998 when government grants worth up to $7,200 per child were introduced. If you are a grandparent today, this program may not have been in place when your children were still looking forward to post-secondary education.

How you can use an RESP now

If you want to conscientiously pass wealth between generations and help minimize your children’s and grandchildren’s debt in the future, opening and contributing to an RESP on behalf of your grandchildren is an excellent option.

Here’s what you need to know:

  • You are the “subscriber” and the student is the “beneficiary” of an RESP
  • The lifetime contribution limit is $50,000 for each beneficiary
  • There is no limit to the number of RESPs that a beneficiary can have, but they cannot exceed their lifetime limit of $50,000 without penalties being incurred
  • You can receive Canada Education Savings Grants (CESG) worth up to $500 per year (equal to 20% of the contribution) and a lifetime limit of $7,200
  • Many subscribers deposit $2,500 per year to maximize this grant
  • A catch-up for missed years of up to $1,000 is permitted
  • You may also qualify for a Canada Learning Bond (CLB) for colleges, CEGEPs and apprentice programs of up to $500 in the first year and $100 per year thereafter
  • Funds can be invested in an investment portfolio of your choice and grow tax-free, like an RRSP
  • Money is paid out as an Educational Assistance Payment and taxed in the hands of the beneficiary. In practice, most students pay little or no income tax because of their education-based deductions and credits, and their relatively low total income.

Speak to your Cumberland Portfolio Manager

If you’d like to contribute to the post-secondary education expenses of a grandchild, speak with your Cumberland Portfolio Manager. We can help you open the account, devise the right funding strategy, set up an appropriate investment portfolio, and take care of applying for and collecting government grants on your behalf.

Back to School – The A,B,C’s of Withdrawing From Your RESP

A great deal of financial success comes down to executing the basics well. In this series called Investing Basics, we review some of the fundamental tools that can help you and your family build and protect wealth over time. In this installment: Withdrawing from your RESP

For parents of university students who have been disciplined in saving for a child’s post-secondary education through a Registered Education Savings Plan – congratulations! You can breathe a sigh of relief instead of despair as the tuition statements roll in. While many people are familiar with contributing to an RESP, we don’t necessarily know much about withdrawing from the account. For example, which expenses, other than tuition, are considered to be eligible expenses? Which documentation do we need to provide in order to access the RESP funds? How much can be withdrawn at a time? What are the tax consequences of such withdrawals?

Once your student is enrolled in a qualified post-secondary education or training program, the contributions, accumulated income, grants, and learning bonds can be paid out to the student. Withdrawals for the student can be categorized as: 1) a return of contributions (also called Post-Secondary Education Withdrawals or PSW), or 2) an Educational Assistance Payment (EAP), which includes accumulated income, grants provided by the Government, and learning bonds. The student must claim all EAPs as income on their tax return in the year in which they receive them – as such, a T4A will be issued in their name. Quite often, students have income below the basic personal amount, or they may be able to claim tuition tax credits, so this results in little or no tax liability. The return of contributions can go to you or be redirected to the plan beneficiary. These withdrawals are not taxable.

EAPs can be used to cover school expenses (ie. tuition, books, housing, and school travel) incurred while the student is enrolled. As of this year, full-time students can now access up to $8,000 in EAPs during the first 13 weeks of enrolment. Thereafter, there is no limit on the EAP amount. If your student is in their second year of school and you did not access any RESP funds for that first year, you would just need to prove enrollment for the previous year and the $8,000 limit will not apply. (Note that there are separate rules for part-time students, so please check the Government of Canada’s RESP guide.)

So, how do you go about accessing the funds from your RESP? To elect to withdraw an EAP, you must sign a withdrawal form from your RESP provider and the beneficiary must provide proof of enrolment in a qualified program. This can be a copy of a tuition fee invoice from the school, with evidence of credits indicating full-time enrollment. If you have a family plan, you can allocate the RESP funds amongst the beneficiaries as you see fit, although government grants are beneficiary specific.

The RESP is just one element of your financial plan. For more information, or if you are interested in an overall financial plan, please contact us at Cumberland Private Wealth. “Achieving your financial goals, is security. Understanding how, is power.” We are always happy to assist you.

Minimize risk when gifting assets to children

Imagine this:

You recently retired from running a successful business, and you’ve always been generous to your children. Your adult son lives with his wife and son in a condo that you purchased for him years prior. He receives an annual dividend from your family trust, and you also pay for your grandson’s private school tuition.

Then comes some bad news: your son is separating from his wife. Worse, her lawyer claims that his condo is now their matrimonial home, that his interest in the family trust is a shared asset, and that all of your past financial support should be imputed as income for the calculation of spousal and child support. There is also a demand for disclosure of your private trust and business documents.

Suddenly, you are faced with unanticipated litigation, an invasion of privacy, and the potential for a negative financial impact. Could this all have been avoided?

Yes, say family law partners Joseph J. Sheridan and Linda M. Ippolito of Sheridan, Ippolito & Associates. In a recent presentation to clients and friends of Cumberland Private Wealth, they shared this real-life story, as well as some best practices that could help protect you from experiencing something similar.

Avoiding unintended consequences

Joseph and Linda went on to outline a number of strategies that can help families pass assets from one generation to the next while minimizing the unintended consequences that can occur when a marriage breaks down.

Here are some of the concepts they discussed:

  • Domestic contracts, also known as prenuptial agreements or “prenups,” are considered the gold standard for legally defining exactly how cash and other assets should be treated both during and after a marriage. The presentation discussed how and when to approach this potentially sensitive topic.
  • Differentiating between gifts and loans with proper documentation and consistent behaviour is another way to create legal boundaries around assets in advance of a potential separation. The presentation explored this topic in depth, including pitfalls to avoid.
  • Keeping assets in your own name or in a trust is an additional strategy that can be used to draw a protective line around property that you do not wish to be “equalized” and divided with a child’s former spouse.

This summary is short and certainly not exhaustive – during their presentation and the robust Q&A session that followed, Joseph and Linda shared many more stories, insights and strategies that could be relevant to you and your family.

For access to a video replay of the full presentation, or for direct assistance with your personal situation, please contact a Cumberland Portfolio Manager.

Drawing down your RRSP in Retirement in 2023 – Key Considerations

If you have been a good saver and diligently contributed to your RRSP, you should be rewarded with a sizeable six or seven figure RRSP that would make your retirement that much more enjoyable. The only issue now is – how do you get money out of the RRSP without paying more in taxes than you should? Typically, it is advised that investors leave their RRSPs alone for as long as possible to take advantage of the tax-deferred growth. While this can be true for many people, it is important to crunch the numbers before you retire to make sure this makes the most sense for your unique retirement situation. Many retirees, especially those with a high net worth, may find there could be a more efficient way to withdraw retirement income.

What You Need to Know

The intended use of an RRSP is to defer taxes from the time you are in a high tax bracket until you find yourself in a lower tax bracket, thereby saving on taxes by your contributions and allowing the money to grow tax-deferred for many years. At some point, however, you will have to take that money out and leave what’s left to your beneficiary. The government mandates that Canadians must convert their RRSP to a Registered Retirement Income Fund (“RRIF”), or an annuity, at age 71. The government also mandates that a minimum amount be taken every year after that. The issue with waiting until you are required to convert to a RRIF and take income is that you have little flexibility as to what you can withdraw. If your RRSP is large, the mandatory withdrawal amount may push you into higher tax brackets.

Could You Be in a Higher Tax Bracket?

Let us look at an example of how this could play out. In the situation described below, the retiree waited until age 71 to start drawing down their RRSP:

Joe has a RRIF worth $600,000 and his minimum withdrawal at age 71 will be $31,680 (5.28% x $600,000 = $31,680) for the year. He is receiving the maximum CPP benefit of $15,679 annually (for 2023) and an OAS benefit of $8,250. These three income sources alone will total $55,609. The lowest tax bracket for the 2023 year is $53,359. This means that Joe has been pushed into a higher tax bracket! This is before the income from his rental properties, defined benefit pension plan, and income from his non-registered investments are calculated.

As you can see from the example above, waiting until the last minute to start taking an income from your registered investments can have unintended consequences. Aside from simply paying higher taxes, there are also income tax implications that need to be considered as you move to higher tax brackets. At age 65, you gain two tax advantages: the Age Amount non-refundable credit ($8,396 for 2023) and the Pension Income credit (up to $2,000). The Age Amount is income-tested and it reduces by 15% of the amount your net income exceeds $42,335 for 2023.  The Age Amount is completely eliminated if income exceeds $98,308. This clawback also applies to your OAS, which begins if your income exceeds $86,912. Both credits could be affected by RRIF minimums that become mandatory at age 71, therefore:

  1. Pushing you into a higher tax bracket
  2. Causing a partial or total loss of your Age Amount tax credit
  3. Causing a partial or total claw back of your OAS income

In addition, since the minimum withdrawal rate gets larger as you get older, this issue will only worsen as you age.

Ways to Look for Tax Efficiencies

Here are some strategies that could help you pay lower taxes on your RRSP withdrawals:

  1. Consider deferring your CPP and OAS. Both Canadian pensions allow you to defer until age 70 to start receiving them, and you get rewarded for the deferral by receiving higher amounts. (Your CPP payments can increase by 42% and your OAS payments by 36%.) You can use RRSP withdrawals to fill the income gap that the CPP and OAS would have provided, so you can draw down your RRSP at a lower tax bracket.
  2. When you stop working, you normally fall into a lower tax bracket, so top up your income to your existing tax bracket with RRSP withdrawals.
  3. Start a RRIF at age 65 to take advantage of a $2,000 pension income credit. No matter how much income you have, this pension credit will allow you to withdraw $2,000 tax free from your RRIF, if you do not have any other pension income. So, fund the RRIF with your RRSP money to take $2,000 out tax-free each year.

Where to Start

Always talk to a financial advisor before starting RRIF payments. There is no one-size-fits-all when it comes to planning for retirement income. Everyone must consider their own financial situation when deciding how and when to start taking an income from an RRSP.

Some things to talk to your advisor about:
a) the amount of your minimum RRIF withdrawals at 71,
b) how secondary income (rental income, side business etc.) will affect your tax bracket,
c) the best time for you to start OAS and CPP,

d) whether you are in a position to convert your RRSP into a RRIF earlier than by age 71.

It is important to ensure all your income sources are working as tax efficiently as possible so that you can get the most out of your hard-earned retirement savings.

At Cumberland, we work closely with our clients so that they have a sound financial plan in place that optimizes their situation and ultimately allows them to meet their retirement and lifestyle goals.

Source: ARG Research

What we know about the Tax-Free First Home Savings Account

Canadians will soon get a boost when it comes to saving for their first home. Starting in April of 2023, the Tax-Free First Home Savings Account (FHSA) will be available to those over the age of 18 who have dreams of owning a home. This account is part of a campaign promise by the Liberal Party in the last election. There are many details associated with this interesting vehicle – here is a high-level summary.

Save up to $40,000 tax-free

The FHSA will allow Canadians to save up to $40,000 tax-free towards a first home. Eligible taxpayers can contribute up to $8,000 a year to the account and this amount can be carried forward into future years if not used. The FHSA will permit a range of investments, including stocks, bonds and other securities.

To open an account, you must be:

1) A Canadian resident,
2) Over the age of 18,
3) Not a homeowner in the current year or the previous four years.

The FHSA combines some of the best features of a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). The contributions are tax deductible, and the money grows inside the account tax-free. The money can then be withdrawn from the account without tax penalty, although it must be spent within 15 years of opening the account or before the age of 71, whichever is earliest.

The FHSA is unique because the proceeds must be used to purchase a home. However, any funds that are not used to purchase a home can be transferred to an RRSP or RRIF account on a rollover basis, and the RRSP rules will apply going forward. It is important to note that such transfers will not impact your RRSP contribution limits.

Speak to your portfolio manager

The FHSA looks like an interesting option for children or grandchildren who plan to purchase a home. Although the Federal Government aims to make FHSAs available after March 2023, the enabling legislation has not been enacted. In the meanwhile, now is a good time to sit down with your Cumberland Portfolio Manager to discuss how this new investment vehicle might fit into your family’s financial plans and to understand all of its many workings.

Tax-Advantaged Giving as a Force for Good

Charitable giving is becoming an increasingly important part of many peoples’ wealth management plans. If you are planning to do some charitable giving, one tax-smart strategy to consider is giving a gift of appreciated securities instead of cash.

To understand the potential benefits of this strategy, let’s look at what could happen in each scenario:

Giving $10,000 in cash
When you provide a gift to a registered charity, the federal government gives you a tax credit of 15% on the first $200 and 29% (to a maximum credit of 75% of your annual net income) for anything above that amount.

So, using round numbers, a $10,000 cash gift to charity will cost you a little more than $7,000 on an after-tax basis.

Giving $10,000 in shares
Now let’s say you have shares in a company that you bought long ago, which have since doubled in value. If you gave $10,000 worth of those shares to charity, you’d receive a tax credit of roughly $3,000 – exactly the same as if you had given cash.

But there is a second benefit in this scenario. Since those $10,000 worth of shares originally cost you $5,000, you have an unrealized taxable capital gain of $5,000. If you are in the top tax bracket, you’d owe around $2,500 in capital gains tax when you sold the shares. But since you gave the shares away, that tax liability vanishes.

Bottom line: the charity gets the same $10,000 whether you give cash or shares, but whereas the gift of cash would cost you roughly $7,000 on an after-tax basis, the gift of shares would cost you something closer to $4,500 when you factor in the tax savings.
The greater the unrealized capital gain, the greater the potential tax advantage. For example, if you have received shares at nominal cost after exercising stock options, almost the entire value of the shares could be considered a taxable gain. This strategy can offset that liability and serve to reduce the net cost of your gift even more.

You can look at giving securities as a way to reduce the net cost of your charitable giving or – if you prefer – you can see it as way to give more generously while maintaining the same net cost to you. It’s all a matter of your priorities and preferences.

This gifting strategy can also work in your favour if you want to continue owning shares of the company. Just keep the $10,000 you were going to give in cash, give the appreciated shares instead, then use the $10,000 to repurchase the shares or make another investment – and since you’re buying at current pricing, there is no embedded capital gains liability.

While we are examining the spectrum of in-kind giving alternatives, there is another consideration: you can either gift your shares directly to a charity, or you can gift them to a Donor Advised Fund (DAF) that you control, receive the full tax benefit in the current year, and then have the flexibility to make future gifts when and where you choose. For example, you could gift $50,000 worth of shares to your DAF now, and make five gifts of $10,000 to various charities in future years as long as you make the required annual minimum disbursement every year (the annual minimum is 3.5% this year and expected to increase to 5% in January 2023).

As with all tax planning strategies, there are some caveats. The charity needs to be set up to accept gifts of securities. There needs to be an unrealized taxable capital gain on the shares to make it worthwhile, which means they can’t be held in a TFSA or RRSP, as that would shelter the gains. And your mileage may vary depending on your tax bracket and other personal considerations. So in each of the above scenarios, you should consult your tax advisor before making your gift to make sure they are in fact suitable to your current situation.

If charitable giving is on your radar, an easy first step is to discuss the opportunities with your Cumberland Portfolio Manager. It just might be something that fits well within your overall wealth management plan.

Why name a Trusted Contact Person?

A Trusted Contact Person is a person Cumberland can contact if we become concerned about your well-being. It’s another way that you can enhance your relationship with us.

The Trusted Contact Person concept is a new security measure implemented by the Canadian Security Administrators and our firm’s Regulator, to help us serve you and your family better in certain situations where we may have concerns about your well-being or may have difficulty reaching you through our traditional communication channels for example.

With your written permission, we will be able to reach out to your Trusted Contact Person in given situations, such as:

Contact information. There may be a time when we simply have difficulty getting in touch with you or the person to whom you have given a Power of Attorney. This may be because you are travelling, or because we are not aware of your latest contact information. If this occurs, we may reach out to your Trusted Contact Person to see if he or she has your current contact information.

Mental or physical health. Age-related cognitive decline is natural and almost inevitable if you live long enough. Cognitive impairment can also strike those at younger ages as a result of a serious injury, illness, stressful life events among other factors. If we see signs that you are having difficulty understanding your financial information or making sound financial decisions, we may check in with your Trusted Contact Person to see if they are aware of any changes in your mental or physical health and situation.

Abuse or exploitation. In very rare situations, if we suspect that somebody may be pressuring you into making potentially harmful financial decisions, we might ask your Trusted Contact Person if they are aware of anybody who might be financially abusing or trying to exploit you. Cases like these typically involve elderly clients who are being manipulated by either a service provider, a friend, a family member or a caregiver. It can also involve clients of any age being targeted by cybercriminals or fraudsters.

Your Trusted Contact Person’s role is limited to providing information about you as it relates to your well-being. Your Trusted Contact Person cannot access or have any authority over your detailed account information. Unlike a Power of Attorney, the Trusted Contact Person does not have the authority to make decisions on your behalf. We will only contact your Trusted Contact Person if we become genuinely concerned about your well-being.

Who Should You Appoint as Your Trusted Contact Person?

You can appoint anyone you wish as your Trusted Contact Person. We recommend choosing someone who is not already designated as your Power of Attorney and does not have trading authority over your account. You can think of your Trusted Contact Person as someone impartial, who would not have any conflicts of interest and could objectively clarify or validate your specific situation and well-being from time to time.

The ideal person should be mature, trustworthy, familiar with your personal situation, and someone with whom you are comfortable discussing potentially sensitive topics, such as your mental and physical health status, your whereabouts and who has a perspective on your personal and business life.

You can add or remove or change your Trusted Contact Person at any time. If you don’t feel that naming a Trusted Contact Person is right for you, there is no obligation to do so.

Contact Us

If you have questions about what a Trusted Contact Person is, who to select, more specifically why we might need to contact them, or how to update your records, please speak with your Portfolio Manager.

In addition, we have attached a link to a background document that explains the Trusted Contact Person at our regulator’s website here.

Federal Budget: No News is Good News

At the end of March, we hosted a panel of private wealth and tax specialists from BDO Canada to discuss what might be expected from the upcoming Federal Budget. During the discussion and subsequent Q&A, several areas of concern were raised. On April 7th, the 2022-2023 Federal Budget was revealed, and it turned out that the most concerning issues from an a individual investor’s and business perspectives did not come to pass. There were no broad increases to personal or corporate taxes, GST or HST, no new wealth, inheritance or capital taxes, and no increase to the capital gains inclusion rate.

An excellent summary of the Budget published by Deloitte said:

“Notwithstanding continued concern from many in the business community regarding the funding of budget deficits, there were no broad increases to personal or corporate tax rates, no increases in goods and services tax (GST) or harmonized sales tax (HST), and no new taxes on wealth, inheritance or capital. The capital gains inclusion rate remains at 50%.”

However, there were a handful of positive initiatives that may be of interest to our clients, their families, and their entities such as:

First Home Savings Account (FHSA). This new account allows individuals to contribute up to $8,000 per year (and $40,000 over their lifetime), with the contributions being deductible to the taxpayer, income earned in the FHSA being tax-free, and withdrawals for the purchase of a first home being non-taxable. The first contribution is expected to be available in 2023.

A surprise tax break for private businesses. Canadian-controlled private corporations (CCPCs) benefit from a reduced rate of federal tax of 9% (vs.15%) on the first $500,000 of taxable income, which is subject to a full elimination where taxable capital exceeds $15 million. Going forward, the small business deduction will be eliminated when taxable capital exceeds $50 million, although the phase out will continue to start once taxable capital exceeds $10 million.

Higher charitable disbursements. This measure increases the registered charity disbursement quota from the current 3.5% to 5% for the portion of property not used in charitable activities that exceeds $1 million, effective for charities’ fiscal years that begin on or after January 1, 2023.

Click here to download the full budget summary from Deloitte and please be in touch with your Cumberland Portfolio Manager if you have any questions about tax planning as it relates to your wealth management strategy.

What you need to know about your pension before you quit

Employers are seeing a trend of their employees quitting their jobs. The Covid-19 pandemic has caused many to re-evaluate how they are spending their lives. Employees are valuing their time more than ever and are looking for opportunities where work / life balance is a top priority. One worry that employees may have as they embark on their next stage of life: What happens to my pension?

The three most common workplace retirement savings plans are, Defined Contribution Pension Plans, Defined Benefit Pension Plans and Group Registered Retirement Savings Plans. Regardless of which type of plan you are enrolled in, all is not lost once you leave your job. Each type of plan has special rules and provisions for what you can do with the money when you leave your employer.

Defined Contribution Pension Plan (DCPP)

Defined Contribution plans are typically made up of a combination of employer and employee contributions. The retirement benefit is dependent on how much the fund is worth when you retire.

When you leave your job, you can transfer your pension into either a LIRA, LIF, or RRIF, depending on your province of residence. A LIRA is a locked-in retirement account holding the pension money until it comes time to take an income from it, when it will be converted to a LIF. It is also possible to transfer pensions directly to a LIF, if age requirements are met.

Provincial authorities are responsible for regulating pension money and most pension money is “locked-in”, which means there are age restrictions on when you can withdraw the money and limits on how much you can take. Rules differ from province to province.

Defined Benefit Pension Plan (DBPP)

Defined Benefit Pension Plans guarantee an income to employees in their retirement. Defined Benefit plans may be made up of both employer and employee contributions, or just employer contributions.

When you leave your employer and have a Defined Benefit plan, you will have two options:

  • Leave the money in the plan and take an income based on contributions up until the point you leave.
  • Take the commuted value of the plan and transfer it to a LIRA. The LIRA will be subject to the same locking provisions as mentioned above.

Whether or not to take the commuted value of a Defined Benefit plan is a financial planning issue that should be worked through with your advisor. They will help you determine whether the income or lump sum would be more beneficial to your retirement plan.

Group Registered Retirement Savings Plans (Group RRSP)

Group RRSPs are the most flexible pension option. When you leave your employer, you will be able to transfer your Group RRSP directly into your individual RRSP. Technically, you could also withdraw the account in cash, but this is usually not optimal as the full amount will be taxable.

If you are considering leaving your employer and you are a member of a pension plan, your Cumberland Portfolio Manager can help you understand the rules in your province, your investment options, and discuss the best course of action within the context of your overall financial plan.

Be Careful When Naming (Or Being Named) An Executor

Imagine this scenario:

Someone in your family passes away with two adult children, and leaves their sister to act as executor. The sister cashes out a $1 million RRSP and gives the proceeds to the surviving son, and transfers ownership of a $1 million condo to the surviving daughter. Sounds fair, right?

Not quite. The son ended up owing about $500,000 in taxes on the money he received. And when his sister refused to share that cost, he sued his aunt. As executor, she was liable for settling the taxes before disbursing the money. On top of that, the aunt failed to obtain an indemnity or a release from both the niece and nephew, leaving her open to personal liability.

This true story shows how a lack of knowledge and understanding and therefore arguably the mismanagement of an estate, can compound the pain of losing a loved one. That’s what made our recent webinar on executorship relevant. It was presented by two of our trusted experts in the field – Hadielia Yassiri, Lead Family Continuity Advisor at Green Marker, and Jandy John, Director at Wyth Trust.

Although the topic of the executor is a very large one with many facets, here are some of the issues that were discussed:

Who to name as your executor. If your situation is fairly straightforward, a spouse can be a good choice. But the more complex your affairs are, the harder the job can become. Complicating factors include having business interests, owning overseas assets, being responsible for a trust that must continue, having a blended family or even the advanced age of the spouse and his or her ability to handle the situation in its entirety.

Combining executors and trustees. You can name one or more executors for your estate and one or more trustees for a trust that holds your assets. For example, you might wish to name your spouse as executor and make her/ him co-trustee with a child so the trust can hold and disperse assets to the child in a controlled manner rather than having them inherit everything immediately. These arrangements can give you some control and flexibility.

Duties of executors. An executor is often responsible for more than 250 different tasks – everything from cancelling the deceased’s health card to enumerating their hockey card collection. The executor must gather all of the assets and see that a value is established for each one, then deal with the legal documents and family, typically file two separate tax returns, and provide detailed accounting to the beneficiaries. And, as we saw in the real life case described above, an executor can be held liable for any missteps. If you have been named as an executor, you might want to weigh the pros and cons of being able to fully follow through on these duties, or perhaps even exercise your right to renounce the position. You may even call in some professional assistance.

Engaging a corporate executor. When you hire a corporate executor, you are putting an experienced professional in charge. They can neutralize some of the most common causes of conflict among beneficiaries by not allowing their decisions to be clouded by emotion or sentiment about mom’s ring for example, and by providing impeccable reporting. They also take the burden of any financial loss if mistakes are made.

Deciding who to name as an executor and how to plan your legacy is a huge topic and the role comes with serious duties and responsibilities. Deciding how to handle given matters if you have been named an executor is another one. Both can have a material impact on your financial and emotional well-being, as well as impact those you care about. At Cumberland, we are here to help our clients navigate these issues and more, and to work with the experts and teams through our comprehensive approach to wealth management.

Contact us to request a replay of the webinar.