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Wednesday, February 23, 2011

Beware the tax traps when passing assets to family

This link goes to an article in the Globe and Mail in which Tim Cestnick talks about parents transferring assets to children, and particularly the issue of selling the children the assets at less than fair market value. I know a lot of parents want to do this, because they suggest it in our planning meetings. They think they are doing their kids a favour by selling something to them at what the kids can afford, rather than what the asset is really worth. They usually change their minds once they find out about the tax consequences to them and to the kids.

Tax information isn't always readable, but this article is. Click here to read it. And I echo Mr. Cestnick's closing tip about getting professional advice. When you're dealing with potential tax bills of tens of thousands, or even hundreds of thousands of dollars, for heaven's sake spring a couple hundred dollars to talk it over with an accountant or tax lawyer.

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