I have a client who has a minor grandson that she wants to have half ownership in a condo that she wants to buy for her daughter and him to live in. She wants her daughter to have NO power over the ownership of this at all, as she has some issues. Her daughter currently lives in subsidised housing for which my client pays her rent, to give you an idea of the situation. My client wants the condo to go to her grandson upon her demise. I know I’ve seen the best way to do this in the past, but have completely forgotten, whether it’s to set up a trust, have her have full ownership of it and deal with it in the will or what. Any advice? Thanks in advance!
Interesting, and oddly, not an uncommon situation, sadly. But fewer people than might have the resources to pull this off in a meaningful and thoughtful manner. Yes, it will cost real money to set up.
Grandma will - like it or not - have to mostly ignore the tax issues and focus on the human side, for which she will need a good Estates/Trusts lawyer. Her age is also a factor (over 65 or not?) to consider.
But, in general, if she creates a formal trust for the benefit of her grandson, carefully appointing alternate Trustees in the event she is either unable to act (ie dementia) or is deceased, she can ensure that Daughter never has or can get, control over the asset. She would want to provide for continued operation of the asset, either from deposited Trust funds (so, enough cash to cover until the child is no longer a minor and can take possession of the asset directly … but that, too, is a consideration on timing) or from her Estate on her demise.
This is FAR more of a legal / family law / trust issue than a tax one…IMO anyway, and the tax considerations will simply flow out of the most effective means to accomplish what Grandma chooses…not the other way around. (In any event IMNSHO tax should NEVER be the first consideration in structure unless it’s strictly a tax-driven idea.) There are many pitfalls to avoid, but a good and experienced Trust Lawyer can do this so it works long into the future.
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Yeah, that’s kinda what I figured. I’m not setting up a trust; better to have a tax lawyer do that. I’ll let her know. Thanks!
Not a tax lawyer…a Estates/Trusts Lawyer…they may be the same person, but the training and experience base is different. I have a couple of good ones, depending on location (Vancouver or Kelowna).
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