It’s In Your Power

Whether it’s gifting to family now or later or fulfilling trustee duties, here are several proactive wealth transfer ideas to consider given how life is these days.

04.23.2020 - Thomas E. Junkin, Senior Vice President, Personal Trust Services and Operations

Outstanding people have one thing in common: an absolute sense of mission.” Zig Ziglar

From my experience, this statement certainly holds true for our clients. The families, entrepreneurs, executives and professionals with whom we work have a sense of purpose that’s reflected in actions taken over years and decisiveness when it’s needed. Naturally, I see this quality most in our ongoing conversations about transferring wealth. As the pandemic wreaks havoc on the world, here are proactive choices and steps for you to consider. 


Take Advantage of Unexpected Capital Losses

If you have realized or expect to realize a significant taxable capital gain from selling or transferring property that’s to be reported in 2020, there may be a silver lining in the cloud of market volatility. You may have a short-term opportunity to trigger some capital losses that could offset some taxable capital gain(s). Be sure to talk to your tax advisor in advance and take particular care to avoid the superficial loss rules (do not sell securities and buy the same securities back within 30 days). Assuming stock markets will recover and you want to participate in that recovery, your investment advisor can recommend suitable investments to replace the ones sold to trigger losses.


Contribute Property to a Living Trust

The purposes, strategies and advantages of creating a living trust are beyond the scope of this article. However, we know one of the main drawbacks trust creators face is that contributing securities or other property with unrealized capital gains will result in a deemed disposition at fair market value. This triggers taxable capital gains in the contribution year. Perhaps, you have been considering creating a living trust for estate planning reasons (e.g., to support a dependent adult, or protect assets from potential future creditors), but have been reluctant, given the punitive capital gains tax you’d owe. Given current depressed share prices, perhaps now’s the time to re-evaluate the pros and cons of a living trust with your professional advisors.


Gift to Family Members Now

You may be thinking of helping adult children, grandchildren or other family members by loaning or gifting money. If considering making a significant gift to one or more people, think carefully about the best way to do it. Talk to your professional advisors to help ensure you understand the consequences and opportunities that may exist.

One of the main things to keep in mind is that giving property (other than cash) to an adult child will likely trigger a capital gain or loss that must be reported for tax purposes in the gifting year (e.g., today’s gift would be reported in the 2020 tax return). Depending on your circumstances, recent market declines can also present a tax opportunity. For instance:

  • Gifting securities that have dropped significantly in value may result in a lower capital gain than would otherwise be realized, or even a capital loss that can be used to offset other capital gains.
  • Knowing your children don’t need money immediately, it’s still worth considering that lower share prices can be an opportunity to gift assets, which can help maximize their RRSP or TFSA contributions, while deferring tax on future capital gains as markets recover.
  • Keeping the future market recovery in mind, gifting securities at current depressed market values can help shift future capital gains from your hands to your child, who may be in a lower tax bracket.  

Whenever making a sizable gift to anyone, think carefully about how the gift affects your long-term estate planning. Do you intend to make an outright gift, or are you making a loan that’s to be repaid? Do you intend the gift or loan to be subtracted from the family member’s eventual share of your estate? In either case, it’s important to carefully document your intention and keep that paperwork in a place easily found by your executor. We think keeping it together with your original will is the best option. If your will needs updating to reflect the intended result of the gift, make the changes as soon as possible. It’s easy to forget about such decisions as time moves on.


Review Philanthropic Plans

Extraordinary times like these may prompt you to pause and review your short- and long-term charitable giving plans.

If you have the ability to make a significant donation to a hospital, emergency relief provider, or research organization, think about whether today could be the time of greatest need. Perhaps giving money now could have a greater impact than waiting for the donation to eventually flow as part of your will.

On the other hand, if your plans include donating appreciated securities in-kind as a tax planning technique, consider how your plans may change for 2020. You may receive a smaller charitable receipt but keep in mind, many charities—that depend upon contributions of appreciated securities or stock options—may face a funding shortfall as a result of recent market volatility.  

If you decide to make a major charitable donation, take time to think through its potential effect on your estate plan and be proactive in making any necessary changes to your will.


Fulfilling Trustee Duties

If you’re a trustee for a discretionary trust, you’re responsible for deciding how much money is distributed and to whom it’s distributed. In these exceptional times, trustees have a fiduciary duty to review the trust terms and make necessary decisions.

For instance, let’s say a discretionary trust beneficiary has suddenly lost their job income. Is now the time to consider making a discretionary distribution to them? Might this be, in fact, exactly the kind of emergency the trust’s founder was thinking about when they created the trust?

On the other hand, let’s say a beneficiary is receiving funds from a trust that’s intended to act as a kind of lifetime income safety net, with the payments gradually depleting the trust capital. Would it be prudent to review current spending to see if it’s possible to reduce the capital drawdown rate during depressed market conditions? High drawdowns, during pronounced market downturns, can have negative consequences for the longevity risks for such trusts.

As professional trustees, we’re actively reviewing these factors for the trusts under our care.  


Update Estate Planning Documents

Check to ensure all of your estate planning documents are up-to-date. Now’s not the time to procrastinate. Here’s a reminder of the essential three documents:

  • Your power of attorney appoints someone to take care of your property and make financial decisions on your behalf while you’re alive, but unable to make those decisions.
  • Your health care directive (the name of this document varies provincially) appoints someone as your agent to make personal and health care decisions on your behalf if you’re unable to make those decisions.
  • Your will dictates who will take charge of your assets and liabilities when you die, and how your estate will be distributed.

If you need to develop these documents, we strongly advise that professional legal advice is essential to creating and signing such extremely important papers. Despite available online options, numerous court cases have shown homemade wills or powers of attorney can cause family chaos.

We’re always in touch with experienced estate lawyers and know they’re finding innovative ways to work with clients remotely, so you can stay safely at home.


Stay in Step

We believe your estate plan should always reflect your values and sentiments.  Whether today’s worldwide turmoil, or an individual experience a year from now, sparks a change in your thinking, we encourage you to take action. Ensure your essential estate planning documents stay in step. Visit and you’ll find further resources. We’re also here to help. Talk to your professional advisors—talk to us.



Thomas E. Junkin, Senior Vice President, Personal Trust Services and Operations


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