Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

Transferring property to your children has many implications

By David Sung

This article also appears in the June 29, 2012 edition of the Vancouver Courier

Read the article in PDF format.

For many families, assets such as recreational property evoke strong emotional attachments and fond memories of vacations past. These feelings can often make it very difficult for the owners of the vacation property to decide about the future use and ownership of the property.

Although there may be a desire to utilize this legacy by passing on the vacation property to the younger generation, a number of questions often arise about the transfer options, income tax, and other implications therein.

Here’s a look at the types of decisions you’ll be facing:

Paying capital gain taxes on death

Unless you’re passing assets to a spouse, when you die you’re deemed to dispose of all of your capital assets at fair market value. Capital gains tax will be triggered when vacation property is passed to the adult children at death. Let’s say the property was bought for $100,000 and has appreciated in value to $1 million. There would be a signifi cant capital gains tax liability of $900,000 with capital gains tax of about $200,000 when the last parent passes away.

One efficient way to cover these taxes is with life insurance. Typically the insurance the husband and wife would take out is ‘joint last to die’ because the rates are much lower, and because in most cases the taxes are not due until the second death. The tax-free death benefit can then be used to pay the tax bill and other estate debts.  Without this ready source of cash, your executor might have to have sell estate assets, including the recreational property, to pay taxes.

Transferring recreational property during lifetime

In most instances, the estate will have to pay capital gains tax and probate fees on the recreational property; however, the probate fees can be reduced or eliminated by gifting the property (and making one or more children joint owners with you) or transferring the property to a family trust for the children.
While this would trigger capital gains tax now, the savings in the long run might be worth it especially if the recreational property market has declined where your vacation home is located.

A trust offers the benefits of an independent third party or trustee managing the property on behalf of the beneficiaries after your death. This can be especially valuable if there are conflicts between the children, or if one or more children isn’t ready to take on the responsibilities of ownership.

Issues such as these may warrant leaving the property to a trust with enough additional funds to cover operating cos