Ed just got the bad news that he is terminally ill. He has two adult twin sons, Jim and Jack, and his main concern is to ensure that they both share equally in his estate and he would like to maximize the amount that they can receive (after taxes and probate). Since Ed only has few weeks to live, he will amend his estate plan to meet these goals based upon the fair market values in existence today, as he does not think that they will fluctuate much prior to his death. His house, which he will designate as his principal residence, has a FMV of $600,000 (ACB = 350,000) and he has a life insurance policy with a face value of $600,000. He also has a non-registered portfolio valued at $400,000 with an unrealized capital gain of $100,000. Based upon the above information, which of the following strategies will best meet Ed’s goals.
Identify the correct answer. For each answer, explain why it is either incorrect or correct. (5 marks)
Jim is named beneficiary on life insurance and the house will be left to Jack, alone, in the estate. Portfolio will be left to them both, to split equally in the estate.
Jim is named beneficiary on life insurance and Fred will assume joint tenancy of the house with Jack prior to his death. Fred will take joint ownership of the portfolio with both sons prior to death
All of the assets will be transferred to the estate. Jim and Jack will share equally in the estate.
Jim is named beneficiary on the life insurance policy and Fred will gift the house to Jack prior to his death. The portfolio will be left to them both, to split equally, in the estate
