The use of joint accounts is an exercise in the balance of convenience and control. We are frequently advising our clients that, despite the added convenience and tax-saving advantages associated with joint accounts, adding another person to an account substantially reduces your control over that account.
On an individual's death, a new taxpayer is created. The estate trustee is responsible for tax on income earned by the individual up to the date of death. All too often, an estate trustee will begin administering the deceased's assets, only to realize that the deceased had failed to properly file and pay taxes during the later years of his or her life.
When a person is an executor of another's estate, it is a lot of hard work. The task often puts the individual in an unpleasant position of conflict. In order to remunerate these individuals for the risks and efforts that they have undertaken, attorneys, executors and trustees may claim compensation for their work out of the assets which they administer.
Because of the importance of powers of attorney to the rights and quality of life of an individual who has become incapable, it is absolutely essential that they be kept up-to-date. A careful review of your powers of attorney should be undertaken every three to five years or after any material life events, such as a marriage or a change in health conditions.
Any approach to dealing with an emotionally charged asset such as the family cottage may lead to disagreements. By taking appropriate steps, communicating with one another, finding creative solutions, and by working together as a family, the cottage can continue to be the source of cherished memories for future generations.