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Fifth Season

Nobody likes to think about their own mortality.  However, as stated on this website in the Fall and Winter Seasons, the reality is that we will all pass away someday.  At Five Seasons Financial, we call this the Fifth Season.  In the Fifth Season, you’re no longer alive… but your assets are!  Having a plan in place that ensures your assets pass onto whom you want while minimizing the negative impact of taxes is crucial!  At Five Seasons Financial, we specialize in working with your accountants and lawyers to ensure your assets transfer to the next generation as smoothly and efficiently as possible.

There is a set of income tax rules known as the “deemed disposition rules” which dictate that when an individual passes away they are “deemed” to have sold all of their assets at fair market value the day before they died. Any income taxes owing as a result of the “deemed” sale are payable within your estate.  

There is something called the “spousal rollover rule” which allows these assets to be passed onto a surviving spouse without having to pay the taxes.  This rule allows your spouse to postpone paying the income taxes, but when they subsequently pass away, the same set of rules comes into play and the income tax is payable.  Quantifying the amount of this tax bill and having a plan in place to ensure there are sufficient liquid assets within the estate to pay the taxes is an important planning element within the Fifth Season.

While taxes at death are an important part of planning for the Fifth Season, there are many non-tax planning issues as well.

Do all of your adult children get along with each other?  Are they all responsible with money?   Unfortunately, the answer to these questions is sometimes no and if that describes your situation, then there are some special planning items to consider. 

Do you have a special charitable organization you would like to bequest some funds to at your passing?  Charitable giving can be a fairly complicated process but can make a big difference to the people supported by the charity.  Charitable gifts within the estate can also result in fairly significant tax savings.  For more information, please contact us to schedule a meeting.