The Wealthy Barber Podcast - #72 — Leanne Kauman (Returns): Trust & Estate Planning Advice

Episode Date: September 22, 2026

Our guest this episode is Leanne Kaufman — President and CEO of RBC Royal Trust and one of Canada's leading voices on trust and estate planning. A lawyer by training, Leanne joined RBC Royal Trust in 1999 and has spent more than two decades helping Canadian families protect and transfer their wealth. She returns to the show after first joining us back in episode #32. In this episode, Dave and Leanne dive into the estate planning issues that trip up Canadian families most often. They break down what probate actually is, and the risks of using joint accounts and gifting to avoid it. Leanne also explains how regular-income Canadians can use trusts, covering formal vs. informal trusts, multi-generational planning, the tax disadvantages, the 21-year rule and the legal duties that come with being a trustee. The conversation also explores the practical side of getting your affairs in order, from what to do before naming someone as your executor to thinking through your beneficiary designations and building a "When I Die" binder. Along the way, Leanne shares her perspective on why you should talk to your beneficiaries while you still can, how to choose the right power of attorney for personal care and property, and the risks of naming co-powers of attorney. Whether you're drafting your first will, updating an existing plan or have been named as someone's executor or power of attorney, this episode is full of clear, practical guidance to help you and your family avoid costly mistakes.    Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Leanne Kaufman (03:16) What Is Probate? (06:06) Dave's Policy Idea for Probate Fees (07:26) The Risks of Joint Accounts (08:47) Supreme Court Rulings on Joint Accounts (10:24) Gifting to Avoid Probate (11:34) Why Do Inherited Cottages Cause So Much Family Friction? (15:27) Capital Gains Tax on Family Cottages (17:57) How Regular-Income Canadians Can Use Trusts (22:36) Multi-Generational Planning with Trusts (23:49) The Difference Between Formal and Informal Trusts (25:10) The Tax Disadvantages of Trusts (28:47) The Legal Obligations and Fiduciary Duties of a Trustee (31:14) How Much Do Corporate Trustees Charge? (32:41) The 21-Year Rule for Trusts (34:21) What to Do Before Naming Someone as Your Executor (36:23) Naming a Lawyer as Executor Is a Personal Appointment (37:38) Think Through Your Beneficiary Designations (39:27) The Importance of a "When I Die" Binder and What to Put In It (43:50) Why You Should Talk to Your Beneficiaries Before You Die (44:46) Hiring a Corporate Executor or Agency Service (49:16) Choosing the Right Power of Attorney for Personal Care and Property (53:18) The Risks of Naming Co-Powers of Attorney (54:25) Conclusion 

Hey, it's Dave Chilthin, the wealthy barber and former Dragon on Dragon Stent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making the subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever, will be here to help you.

you do it. Before we jump in, a quick but important note, nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chilts and the wealthy barber with the wealthy barber podcast. How about this shirt? And then Leanne, our guest, who my I'll introduce in a moment as more or less matched and no, we did not coordinate ahead of time. Thank you to all of you for the wide following.

It continues to grow. We're astounded by the feedback. We've had great guests and today is no exception. Leanne Kaufman is back, the president and CEO of RBC Royal Trust. She and I are good friends. I want to be upfront about that, but I want to tell you why we're good friends. She is one of the finest people I know, kind, generous to everybody, exceptionally smart. but let's be honest, none of you care about that.

What matters to you is she is an estate planning expert, a true expert. We had her on the show in the past, and it was one of our most popular episodes. She's able to come at things with great experience. She's a lawyer by trade, master of laws from Osgood. She went to Queens before that. She's got every designation under the sun. She's a Blue Jays fan. I'm not keen on that front, not a Taggers fan, but she has lots of other positives.

And she and I worked together a lot in the past, gone on speaking to her. is together. We once went on tour where I had a kidney stone and she had to pull over to the side of the road and watch me do stride jumps. So I was trying to get it to move. It did not work, by the way, but it gave her tremendous entertainment. So Leanne, welcome back to the Wealthy Barber podcast. Thank you. Thanks for all the kind words. And my deepest regret is that I don't have video evidence of you in McDonald's parking lot doing the stride jumps. But it'll live here forever. Yes, a low, low moment. Now, kidding aside, your appearance on the podcast was a huge hit. And, you know, I know you well and I know what an expert you are in all of this, but it really was embraced by the audience.

They loved hearing your perspectives on different estate planning challenges. And one of the things you do, of course, is you see on the front line all the things that can go wrong and that do go wrong and all the family friction that results from that. So we'll talk about a lot of that. But what I'm excited about is we talked ahead of time. Normally we wing all of these types. of things, as you know. But we talked a little bit via email about what subjects to cover off. And I really like some of the choices that you sent us. In fact, I kind of got back to you and said, yes, let's just go with those because you're hitting right on what we get asked a lot about and what's tended to go over well. Let's start with probate and don't laugh when I ask this

basic question. What is it? It's such a dirty word that nobody ever gets past the word to figure out what it actually means. So probate is basically the court or the government. seal of approval on someone's appointment as an executor. So it doesn't give the executor power. The will gives the executor power. But what probate does is it proves to all the third parties that the executor has to deal with. Financial institutions being the biggest one, but it could be insurance companies. Even the MTO to transfer the car will sometimes ask for probate or the land transfer office to register property to change the title property.

Certainly they will. Yes. Certainly they will. With one very rare old exception, but yes. So it's basically, like I said, your seal of approval. And third parties have every right to ask for that probate because they need to know that they're blessed in dealing with you as the executor that this is the last will, that somebody isn't going to come in tomorrow with a later will, that appoint someone else and now they're in

trouble because they've taken instructions from you. So this is something that is like not just someone. trying to be difficult or being challenging at an already challenging time, it is truly a liability issue for all those third parties that are dealing with the executor. Can I pause you there? Because that's such an important point. I actually get a little frustrated with some of my friends because they're annoyed with the financial institutions. They're annoyed with these third parties for being so demanding on the paperwork front, on the probate front. But come on, it's 2026. Are you kidding? I mean, liabilities have to be paid attention to. There's so many lawsuits, you have to make sure your

eyes are dotted, your T's crossed. It's common sense. I think that people misunderstand and think that it's some sort, it's just a tax. It's just a government tax. But there's a reason behind it. And I know we'll probably get into the fees, but different provinces have approached at different ways. Alberta is, I haven't checked it recently, but it used to be 400 bucks, flat rate. So nobody complains about probate in Alberta. Because you pay this very nominal flat rate and it does all the things it's supposed to do. Where people, get irritated are places like Ontario, British Columbia, Nova Scotia, which have the highest rates. And it's based on the percentage of the probatable assets. And so around 1.5% call it. So even

then, it isn't like completely punitive, although the bigger the estate, obviously, the more frustrating it is for the beneficiaries. But I think that's why people get so agitated is because they see it as another tax or a tax. And yes, there's a fee. And in fact, even in Ontario, they change the name to a state administration tax. It's not even called probate anymore. So they even put the word tax right in there. But it is a fee for the court to perform this service. What do you think of my argument? And by the way, even though we're friends, don't be afraid to blast it. But what do you think of my argument that the Ontario government, for example, would raise more money if they made the fee lower because then people would work less hard trying to circumvent it?

I think you're bang on. People go through as tremendous lengths to avoid this. Craziness. Yes. And sometimes they're valid, right? Like in certain jurisdictions, including Ontario, you can do something called dual wills or multiple wills. And so multiple wills mean that you put all of your probatable assets in one will and your non-probatable

assets in the other will. Now, don't get too excited about what the non-probatable assets are. They're limited to shares of private corporations. Private corporations. Because there's no third party who needs to give, to take, constructions from an executor to do that. It happens by operation of law. The shares go as they're meant to go. And then certain real estate, which is a shrinking category of real estate in Ontario anyway. So very limited assets. And then maybe you could put like personal effects or things like that in the

other will. So take some legal advice on that on whether a multiple will strategy works where you are and works for your circumstances. But that is a legitimate probate planning exercise. Put putting things in joint name just to avoid probate might be more questionable. You're being diplomatic there. No, because really, it's kind of a weird thing to do without knowing the nuances, thinking them all through, etc. I shake my head at some of the stuff I see. So to avoid 1.5% in probate fees or less, depending on where you are,

people will give the asset away while they're still alive, which is effectively what the joint account is. You are giving it to whomever you're making it joint with. And so that means you're subjecting it to their creditors. You're letting them have as much control over it as you have, etc. So there are divorces, maybe. There are divorces. I mean, there are all sorts of reasons why you might not want your child's nephews, whomever's title, her name on the title to the assets that you have. And so like you said, think through the nuance. Get some advice on the consequences. Understand what you're doing if this is the reason why you're trying to do it.

So, yeah, probate is an interesting, interesting and very divisive topic. I mean, so many people, again, are making careless mistakes, especially on the joint account, not thinking through all of the possibilities. And, you know, you know it living in this world. What can go wrong often does. And a lot of this does, in fact, come back to bite people. I think there's some political challenges with the joint account, too. Some kids then argue who really owns the asset post-death, was their favoritism involved?

All of these things can jump up and bite you. Yeah, there was a Supreme Court decision that dealt with that, do they really own it or not issue many years ago, where it said, if you're making an account joint with an adult child, the presumption is going to be that you're doing it for estate planning purposes and you don't actually mean to transfer full ownership to that child. Right. So if it's like one out of several, right? One out of several children, I mean. So the intention would be that it's on, you're holding it on what they call resulting trust, just just a fancy legal term for the estate. So you're basically there as a placeholder, a bit of an informal trustee for the estate. So it falls back into the estate for distribution purposes when the time comes when the parent passes away. And if that's not the case, if you actually do intend to make a joint with writer survivorship, meaning it becomes a 100% the other person's asset when the first owner dies, then you need to have evidence at that. You need to what they call rebut the presumption. So if that is your intention, no, no, no, I want this to go to only one child. Get to a lawyer. And make sure you've got it documented appropriately so that they can rebut the presumption

when the time comes if anyone questions them on it. What was that case again? Because it's quite famous. It's quoted so often because of this. Yeah, Pecour and Pecour and Pecour and Pecour and P-E-C-O-R-E. And you can Google it. Well, even if you aren't, even if you made it up, frankly, none of us are going to check. So you're good.

We're certainly not checking pronunciation. I can guarantee you that. I find all of this very interesting, by the way, because it's amazing to me. I run into so many Canadians who couldn't have cared less about their annual fees, for example, on their mutual funds. But when you talk to them about the one to one and a half percent, wherever they may fall on their probate fees, they are nutty about how hard they're going to work to somehow avoid them. And then you get into outright gifting too, which is fine, right? Like reduce the estate value by doing outright gifts in your lifetime. My kids are pushing me on that front.

They think that's the best estate planning technique they've come across. I mean, we're friends too. I wouldn't object to participate. You know, again, that's something talks through the consequences. We all know we're living longer. We may need more money than we think we might need. And again, is it worth it? Is it the right thing to do?

Because the assumption might be, I'm going to put the house in the kid's name now. And then they're going to let me live with them when I need care, when I'm 95. And I don't know whether that's what the kid's intention is. And like you said, marriage is breakdown and now the kid owns a house. And so I think there's lots of consequences to think through with the gifting too. But that's another probate planning technique. Yeah, it's becoming more and more common for sure.

I was going to save this for later, but I'm going to jump to it now. We talked a little bit about it in the last episode we did together, but caught it just. I told the story in the last episode of you pushing me to. to do a video on cottages and me saying, no, I think you're in the wrong here. Only 10-ish percent of Canadians own a second property, et cetera. I'm not going to go down on that path. And man, was I wrong? The video came out.

It was one of the most popular videos in the series. We had so much feedback out speaking. The number of people in the lineup who talked about cottage disasters was crazy. I don't know if you remember, but you and I spoke in Victoria one night. And there was like four people in a row in lineup to get bookside talking about how their family had had major falling outs over their coffee. It was crazy. So what is it about that that makes it so much more difficult to manage than so many of the

other assets that are distributed? Well, a couple of things. I mean, it is the most divisive, I think, of all the things. That and then the teapot, right? Like the heirloom personal effect. But it's, it is that emotional attachment issue. And people feel so compelled to not let it go because it was the place that, brought joy to the family. It was where all the best family memories were made. But then it comes down

to, well, I was promised it would be mine, or we can't share it because, or somebody has twice as much income as the other one does and wants to make big improvements. So it is, I think it's the emotional issue that makes it the divisive part of it, because there's always going to be bad feelings when it, when there's something emotionally tied to it. And that it's, it is a big asset generally. Right? Like when you look at what cottage prices have done, it's a big percentage of many people's assets. And there's a big tax hit as well. That's right. It's not your, if you're not declaring it to be your principal residence, it's fully taxable capital gains.

And so there's that consideration to think through as part of the planning as well. I think you and I'm maybe going to talk about trust a bit later. You could use a trust structure, but it doesn't solve the emotional issue. It doesn't solve the practical issues. It's a legal structure. It might help fund any of the expenses tied to it. It might help fund taxes and property taxes and maintenance and so on. But it doesn't fix the emotional issues.

You hit on some really interesting themes there that have come up in real life so often with friends, colleagues, people approaching me at speeches. They're costly to own. And often one person in the inheriting group wants to expand it. Another person says, I don't have the capital or don't want to do that. I don't get there enough. A lot of conflicts there. The other one is scheduling. Oftentimes when you first think you're going to inherit the cottage, think we can work together, we can make this happen.

But over the years, people's lives change. They get busy. They get kids in sports. One moves, et cetera. And the proper scheduling becomes a major headache for people. And of course, that compounds the first problem about whose desires to fix it up, et cetera. I mean, you've seen this play out in real time many, many occasions. You know, in most parts of Canada, we're talking about an eight to 12 week period when,

and people really want to use the cottage generally, right? I mean, unless it's winterized and people can use business ski chalet or whatever, they enjoy the winter. But the prime weeks and then long weekends are the worst, right? Like, they're the number one scheduling nightmare. So, I mean, I don't have a good solution. Well, I do have a good solution, but nobody likes it, including my family, which is sell it. Or the flip side of that is buy two, one for each time, or however many you have. But that's, I don't think that's very practical.

So, I mean, if there was a magic bullet to all of this, somebody would have solved it. We wouldn't all be talking about it. People wouldn't line up to tell you their terrible stories. But honestly, it is, it seems to be the number one family breakdown issue. Well, you know what? It's interesting to me sitting back and watching all of this. When I meet estate planning experts like yourself, they almost all say sell it. Now, they know that there's exceptions.

There's some people who won't follow that advice and for good reason. but the general feeling is avoid all of this sell it people move on they'll figure out what they want to do with their own summertime some will buy on their own you brought up another important point that i don't think gets enough attention you've got a big pent-up capital gain with a lot of these cottages i mean if they happen in the moscow for heaven's sakes it could be millions of dollars and so you could owe 500,000 dollars in tax because you're not selling the cottage that money has to come from somewhere and so it has to come from the other assets and so people who weren't that keen on getting the cottage left over to them in the first place, now we're seeing the rest of the estate diminished by the tax liability too. Now, there's ways around that where the people inheriting the cottage agree that that'll lessen their part of others, et cetera. But you can see how tricky and political all this is. Yeah, it is a big bill. And if it's one of the major assets of the estate with huge gains, because let's like, look, most of these are held on to for decades, it will diminish and erode the balance of the estate for sure. I mean, unless there's been a

specific life insurance policy left for the purpose or something like that. I mean, one of the things that I saw that was more creative not to deal with the tax issue, but around the, what do we do with it? I saw a will that gave the executors one year. It wasn't really the executors. It was, there's this one year period. And there were two kids in this family. And if the kids haven't figured out within 12 months, how they want to deal with it and have an agreement amongst themselves, then the executors to sell it. So they put a timestamp on the period of of time that this could kind of remain an issue and they had to quickly figure it out. I mean, I think it's better to deal with it while the parent or whomever is gifting it is still

alive. Deal with it, meaning not transfer the title necessarily, but know what the plan is, know who wants it and who doesn't. Because I think that's a problem that we suffer from generally in a state plan is we don't talk to each other about expectations. You're right. There's not enough communication, although we had that hilarious experience where I did that video and I said it's so important.

to talk about the colleges before your death, et cetera, and I go through it all. And then I have a friend come up and say, that was horrible advice. We had the chat before. And now everybody's mad. Well, I'm still alive because I wish they were mad at each other, but I was already gone. So as you point out, there is no magic bullet perfect answer to any of this. Now, you mentioned trust. And you are the president and CEO of royal trust.

So I'd like to think you know a lot about these. For the most part, when I travel across the country, people think of them as something for the that the wealthy may use trust for a variety of reasons. We'll talk about those reasons in a moment. But give me some cases where you see the non-wealthy using trust effectively. Yeah. And trusts are trickier now than they used to be from a planning perspective. For sure.

Because they're taxed very punitively and we can come back to that. But there are good non-tax reasons to use trust that are not like you said just for the Uber wealthy. And the one we think about the most and is probably in everybody's will. is the minors, right? Anybody that is leaving or potentially leaving an inheritance to someone who's not yet age of majority, there's going to have to be a trust to hold it for a period of time. But most of us probably don't even think that the age of majority is likely a good age to give an inheritance to a young adult, unless it's a very nominal amount. So typically,

if there's a realistic possibility of leaving money to a young adult, then you want to think about at what age do you want them to have access to that money. And that could be so much at 21, so much at 25, the balance at 30. There's a myriad of very flexible ways to structure how that plays out. So that's number one, like young adults or an age-related issue. And I do want to say, that trusts are, although they're cryptic and not well understood by the general public, because why would you? They are very flexible and incredibly, if you structure them properly and with the right people involved in helping you do it, they're very effective. So number one, that. Vulnerable beneficiaries, by which I mean people who are subject to being at risk of blowing through the money,

for a lack of a better word, that could be because they have some sort of addiction. They could have some bad money habits and they could have actual vulnerabilities like some sort of disability or even if it's not a fully recognized disability that you would get a disability credit for type thing, just a vulnerability. I'm going to stop you there because you mentioned addiction and I learned a lot out on tour dealing with people. How many came up and said, I wish I had used to trust because we had addiction problems in the family. And sure enough, they blew up as you would think they may. But interestingly, we also had some addicted people come up and say, I wish I'd inherited it through a trust because the addiction ended up overwhelming me and things went off.

I wish people would think through that one more. I heard a story when I was out in our BC office about a young person who had an addiction issue and we were their trust. and we were able, they were living on the street when the trust was established. I'm not going to get all the facts right, but effectively through the use of using the trust money properly and for programming and for upskilling and the way it was intended to be used, they were now employed and holding down a job. And so it was definitely a value to the recipient as well. Okay, another good one is blended families.

So when you have a second or sometimes a subsequent to second spouse, and you have children from previous relationships. So you want to leave something to the spouse or a stream of income, maybe to the spouse. But you want to preserve the capital or a portion of that capital for the children from a previous relationship. If you do nothing, the spouse could in theory get everything, depending on whether there's a will, whether it's properly structured, and which could potentially lead nothing for the children from the previous relationship. But this trust structure would ensure that the spouses looked after during their lifetime and then on their deaths, the capital or whatever of the body of the trust fund that is left goes to the children. And then you get cottages we talked about.

It is possible. I mean, you can put basically any asset into a trust. The challenge with a cottage trust is there has to be liquidity. There has to be investments. like there has be cash or investments in addition to the real property or the trust won't be able to pay for anything, maintenance, property taxes, etc. Where the wealthy tend to use them, although you don't have to think super Uber wealthy necessarily, is multi-generational planning.

So you want to make sure there's something there for the grandkids or the great grandkids. And sometimes this can get a little bit dynastic. People can try to control things for too long from the grave. But that's really the only structure that's going to. going to be in place to make sure that there's something there for the grandkids, great-grandkids, whatever. And then the last example I would use that is that, again, it might be to skew more to the high-net worth, ultra-high-net-worth, but charitable giving. Philanthropy. So that could be a trust where you are providing for family or friends during their lifetime, but kind of like what I talked

about with the blended family, the assets that are left go to a charity or a series of charities. You can set a private foundation up like a trust as opposed to a corporation. There's all sorts of ways that you can use a trust to benefit to do philanthropic planning or charitable planning as well. So lots of great uses still exist. I said earlier they're punitive. Most trusts with a few exceptions are taxed now. Every dollar taps at the highest marginal rate. Let's get to that in one second.

Before we talk about that and the other downside to trusts, and I want to ask you, What is the difference between a formal and an informal trust? You hear the expression informal trust a lot. An informal trust isn't a real trust. It's basically earmarked cash held in the name of usually a parent, right? So you're thinking about a parent holding on a brokerage account. Yes. Yeah.

And a lot of them don't recognize informal trusts anymore. There's too much anti-money laundering, K-YC information. They need to be, if they're going to be called a trust, they need to be structured as a trust. We need to see a trustee. they're kind of disappearing, I would say. It's really more of an earmarking. So this is a separate account that I'm opening up and putting my child's name on it, maybe, or demarking it as being child's account.

But the parent's still going to be the one that gets the tax slips. They're still going to be responsible for reporting it on their tax returns. The legal owner is still the parent as the parent in most cases. So it's not an informal trust. It's like a fictional trust. It's not really a trust. But in the old days, you saw these all the time with people in saving and mutual. Yeah, in trust four.

Do you not see that as much now? No. I can't speak for all the financial institutions. I know that here at RBC, they're at least on the wealth side. You're cautious. They're really not a thing. Okay. So let's talk about the downside of trust, the punitive tax structure, and also there are costs.

The trust provider is not doing this for free, obviously. Walk us through the two negative. Okay. So back to the tax issue. Yeah. taxed at the highest marginal rate, unless there's a few exceptions. One of them is a qualified disability trust. So if it's being set up for someone who actually qualifies the disability tax credit, then it's alter ego and joint partner trusts are trusts that are creations under the

Income Tax Act. You have to be over 65 to set them up. It's another probate planning technique, actually. So you can put assets into the trust, the alter ego trust, or if there's a couple, a joint partner trust. For tax purposes, it's kind of a flow through. It's almost as if the trust doesn't exist. It all gets attributed back to the individual during their lifetime. Right. But because the assets are held in trust, they're not part of your state. They don't fall under your will anymore. And so they're not subject to probate. So alter ego trusts are particularly and joint partner are particularly interesting in British Columbia. Okay, now I'm going down a rabbit hole. I'll come back to the reasons why we don't like trust, but I should have talked about

this earlier. So, so the probate issue, but also in, in, in, in, British Columbia, they have something called the Will's Variation Act, which is newish in the last, I don't know, 10, 15 years. And the Will's Variation Act says that anyone can take a run at someone's will, the distribution of their estate under their will, if it's unfair. I'm oversimplifying, obviously. But basically, they can take a run at it. But they can't do it if it's a trust because it's not the will. So the Will's Variation Act doesn't apply to trust or alter ego trusts. In the rest of Canada, the only only way you can challenge a will is if you can prove that there's been undue influence by the person who made the will or they were incompetent. They were incapable of making that will. So, so it's a pretty high bar. We have very high testamentary freedom everywhere except British

Columbia, it seems, in this country. So, so in BC, people like to put things into alter ego trust now because it avoids that makes sense. If they think that there might be somebody who challenges something. So did you just basically say in summary, if you're going to do something very unfair to it in Alter Ego Trust? That's how I read that. I mean, something like that. I'm just kidding. And you make a good point. The province by province differences here in estate planning are significant. The experts you're using, the people you're getting counsel from have to really know their stuff on a province by province basis that's tough to read books because they're not going to cover off all the nuances province to province.

You need somebody on the ground there. Yeah, agreed. Agreed. And when people move provinces, which they do sometimes, especially in retirement, they need to think that through too. Okay, so the other problem with the trust is there are two forms of trust. Basically, we call them either they're intervibos or lifetime trust. They're created during your lifetime with assets that you own today and you're putting them into trust. Or they're testamentary trust. They happen under your will.

They happen after you die. So if it's an intervivis trust and you're putting money into trust today, then in most cases, is it's going to trigger capital gains tax on any assets that you put into that trust because it's going to be. There's a deemed disposition when you put it in, right? Yeah, yeah. So it's as if you sold it and you have to pay. So that's that's that can be punitive, right? I mean, that's, now that again, that doesn't apply to the alter ego trust. The alter ego acts more like a flow through from a tax perspective. So that's a negative. And then you talk about the cost. So there is, there's an annual tax return that has to be filed. So there's an extra tax filing for a trust every year. One of the

things I want to break in, I mean, for our listeners, is they're their own legal entity, right? And I mean, that's basic stuff. But that's, would you say that's true that they're their own legal entity? I mean, they have to file a tax return. Yes. For tax purposes, they certainly are. Legally, what happens, you are gifting or selling or whatever to an individual who is the trustee. So if I set up a trust and I make you, Dave, the trustee of the trust for my children, you, Dave, are the legal owner of those assets. So there isn't, the trust doesn't exist legally from an ownership perspective. Ownership perspective. That's right.

Yeah. You couldn't put like the trust name on anything in a brokerage account or a piece of real estate or whatever. It would have to be Dave Chilton as trustee of Leanne Kaufman's Children's Trust. But you don't own it obviously in your personal capacity. You own it as trustee and you have a duty. So so what the law does is it splits legal ownership and beneficial ownership. So the beneficiaries of the trust own the beneficial ownership and the trustee owns the legal ownership. And they're operating strictly for the benefit of the beneficiaries.

And it comes, as you can imagine, with a lot of duties and obligations and highest fiduciary standard. So that's another downside. You've got to find a trustee. Who wants to do it? Who wants to do it? And who is going to be around to do it? Because if you're choosing a contemporary and the trust continues for whatever period, of time. They have to be around and willing to keep doing it. And then you need a mechanism

ideally. You have a mechanism to replace that trustee when it's required. I had seen several circumstances where people haven't thought through that longevity of the trust issue. And they've named someone. I mean, I had a gentleman come up to me. Yeah, Boulder. I had a gentleman come up to me at the client event. He was in his 70s, mid to late 70s. And he said, I was named as executor of my nephew's estate. And I'm his head. is trustee for his teenage children. And I'm not going to be able to do that. And it obviously just wasn't like just second level thinking right on this stuff.

So so that's a downside is choosing the right trustee. And are they going to charge fees? Maybe. Maybe, probably, unless they're a really good Samaritan family member, friend that doesn't want to do that. And there's work involved and there's liability involved. Probably more importantly, there's liability. So when you step in at Royal Trust is,

Royal Trust acts as trustee in some cases with the trust you're working on. What kind of fees are you looking at if someone ends up going that route? We generally don't quote investment management as part of the trustee fees anymore because it used to be couldn't even delegate investment management. But things have evolved. So generally speaking, there's a separate investment manager that the trustee hires. But we're looking at somewhere less than 1% per year. and it depends on the value of the assets that we have. Right.

The more that's there, the less you charge percentage-wise. Yeah. I mean, in a big one, we're talking basis points, not percentages, right, in most instances, meaning like a percent of a percent. But that's personal to us. There is a formula in most provinces. It's quite antiquated. If there isn't a compensation agreement, you could be bound to the court fees,

which are like a percent of the assets that go into the trust. a percent of the assets that come out of the trust and then a percentage for ongoing management, it's a bit complicated. The better thing to do is to speak to compensation in the trust deed itself or the will itself and to make sure it's very clear. Otherwise, you might be forced, to pass your accounts in front of a court and make sure that the court blesses what you've done and the fees you charge to do it. Okay, that all makes sense. Before we leave trust, two quick questions. one is that sometimes you hear a time frame associated with trusts. A trust can only go on so long.

Walk me through that. So 21 years is a magical number in trusts for a few reasons. One of them is the Income Tax Act for most trusts again. I always have to put an asterisk and say most because there's always exceptions. The Income Tax Act will require a deemed disposition of the assets every 21 years. And they call that the 21-year rule. So you have to be able to come up with the cash. Very creative. Very creative.

Well, we're not short on imagination in the trust world. But 21 years comes up in other places too. So there's something called the rule against perpetuities. It's been a long time since I studied this. So I'm not going to get the language quite right. But it basically says a trust can only continue for 21 years following the death of a life that was in being at the time the trust was created. So people would use creative things. things like the last, it does seem to have to be somebody who's alive, I don't think. Like, it got so

creative there was things like the descendant, the last descendant of Queen Elizabeth that 21 years after, whatever, that people would go through some hoops. I think I've watched that, but it doesn't matter. It's another one of these medieval legal, fictional type things, which is what most trust laws based in. Certain provinces have done away with the rule against perpetuities. So Manitoba, I believe, is one of them. So if you really want to be dynastic and say, I want this trust to last forever and ever and ever and ever, you can have it governed by the laws of Manitoba. And the rule against perpetuities doesn't apply. Okay. Now we're on to a subject that has gone over extremely well with our audience. You're going to be named an executor, not you as in Royal Trust. I'm talking

you as in Leanne Kaufman or Dave Chilton. What do we want the person naming us to do ahead of time, death to help us out. What's the right way to handle this? Well, number one, we want them to have a will and write it down. Exactly. And where is it? And where is it? And how do I access it? And who else knows about it? So like, just get the paperwork done, right? I mean, it's still amazing to me how many people just have avoided this, this thing on the basis that they're never going to die. I don't know. Whatever the case may be. But get it done. Because if you don't get it done, then the person you have chosen has to apply to court to become the executor. There's no right that they have to step into their shoes.

And I know we're talking about wills, not powers of attorney, but I can't not talk about powers of attorney, have a power of attorney in place, and think about who it is that you're naming as your attorney. I think that as an executor, you also want to make sure that you've, or that you're, ideally you know that you've been named and you've agreed to the task, right? So they would like to be asked, I think is another thing. That's a very important point. A lot of times people don't communicate that effectively. And you want to make sure they know. And you want to make sure by the way you update that request.

So when you first appoint them, you may be 30. 20 years later, as the relationship changed, have they moved, if they got their own challenges, you want to say to them, hey, are you still comfortable being the executor? And if not, then you have to go down a different path. Those things have to be stayed on top of. I think when people update their will, they don't pay enough attention to rethinking through their executor appointment to make sure it's still making. sense.

And make sure you've named an alternate because it's that first person you've named can't or won't act. You need to know that there's an easy mechanism for someone else to step in. I have an alternate to the alternate. I also think it's really important for people to understand. This is a personal appointment. So if you've named your lawyer at your law firm, it's personal to that individual. And if they canter won't act, the law firm is not going to step in.

There's no legal mechanism for someone else at the law firm to just take that over the way they've taken over the rest of the practice of that lawyer. It's a personal appointment to the individual. So that's very important. You know that 95% of people I speak to do not know that. 95% do not know that. That if you appoint the lawyer and the lawyer doesn't do it or can't do it, it doesn't automatically go to the firm. So I'm really glad you brought that up. Tell our audience, I don't know if this is still the case.

I'll admit I've lost track of this. But isn't it true at one point relatively recently in Ontario? If you appointed your lawyer as executor and he or she passed away, then it became his or her executor? Yeah. If they pass away while they're administering your estate. So while they're, yeah, yeah, yeah, unless you have a mechanism. I mean, if you have, if you've named an alternate, then it should fall to the alternate. But if you have it, okay.

Then, yes, it's their executor. So I always say, so if they've named their brother-in-law, guess who's working with your family now. That lawyer's brother-in-law. Okay, make sure that all of your beneficiary designations are in place and align to the overall strategy of the estate plan. And when I say estate plan, I don't just mean the will. I mean, we do have to think about the estate plan as all the things that will happen that will get triggered as a result of death. And so the biggest issue we see with beneficiary designations is that one person gets left. the RSP or the RIF, which we know has big tax consequences associated with it.

But the tax bill for that is footed by the estate. And so if you've left one child the registered plan and another child to balance the assets under the estate, this child's paying for the tax on this asset. So that is, I think, something an executor probably doesn't want to deal with. I know listeners are thinking, Dave, you've already spoken about this in a couple different podcast, but there's a reason that Lianz bring it up. there's a reason the other experts have brought it up. You need to think this through. And to be honest, I probably wasn't as on top of this with my own estate as I should have been. But lately,

I've been listening to my own guests and thinking, I've got to think all this through really carefully. I've got to make sure I checked my beneficiary designations that I've done all the things that we're preaching on the podcast and I'm not a hypocrite. And it really does force you to analyze all this. But her example there about the RSP, the tax, there's a reason they all bring it up. It happens a lot in real life. Yeah. And beneficiary designations, back to our, where we started this conversation with the probate, they're a very legitimate way to avoid probate because the beneficiary designation goes straight

to the named individual. So don't leave them blank and don't put a state on them. Like actually use the beneficiary designation if you care about probate fees, but do it properly. Okay. The other thing is, and I know we talked about this last time, but it's, again, worth repeating, lead some form of a When I Die binder for your executor. Absolutely. Where every asset that you have, every liability that you might still owe, where to find everything,

who the key contacts in your life, your professional life are, where's the original will? That's a big one. Funeral instructions. Like, what do you want? What do you want to have happen? Ideally, that isn't a mystery for your family or your executive. actually the executor's job. If the executor isn't a family member, often the family's already dealt with it before the executor gets brought in. But that's something critical. And families struggle

with that and they're grieving and they don't want to have to guess how you wanted to be sent off. The other thing I would say is non-binding instructions on things like personal effects. So some sort of a memorandum or some sort of methodology that you want used to talk about how you want your all of the things in your home or that you own that are not specifically dealt within the will to be distributed amongst your beneficiaries or to whomever. You can put it right in the will, but it's easier to deal with and executors will generally abide by, a non-binding letter of wishes. You might even want to deal with a cottage that way, really. I mean, it may not be worth trying to structure it too tightly into the actual will itself, but you might want to leave some

instructions or guidance or whatever for your loved ones and your executor in something like that. Digital assets. I'm sure you've talked about this with others and we probably talked about it, but like get those affairs in order. And that's easier for me to say than for you to do. Again, not a silver bullet here, but think about your big ones. Think about the things where your family or your executor would need to know your username or your password and figure out if there's a way that you can grant them access to that using the platform itself. So Google has their inactive account manager where you can assign someone that gets authority if something happens to you. Apple has something similar. Meta has something similar. So

these big platforms have ways in which you can grant access without it being illegal hacking, which is kind of what using somebody else's password is. So digital assets are a tricky business, but they're so, they're everywhere now. We can't avoid talking about them and we can't even say they're free young people. And remember, we're not just talking social media platforms. We're talking crypto in some people's cases. Like, you've got to make sure that all of this has been communicated. I want to go back to the When I Die binder. I mean, I'm going to brag here and you've got to put up with it. But I think that was the first person talking about this. Honestly, in the late 80s when the book came out, I talked about it on stage all the time. Not because

I'm sharp. I'm not, but because my grandfather had passed away. In 19, in 78 in the summer of 78. And they were still finding assets that didn't know he had two years ago. Shares in companies, shares in a private company. It turned out he had a safety deposit box at Victoria and Gray. Do you remember Victoria and Gray? The old trust company, I think it started at Stratford. And you have to put all this together. That's the biggest gift you can give the executor. In fact, I'll go a step further. It's unfair not to do this. Yeah. So to ask somebody to be an executor, take that burden on, take that responsibility on, and then not put the work to helping her, to helping him out.

That's not fair. And I also find I'm really lecturing here, but the people who put these together after the fact, always say, am I ever glad I did that? It gave me a better feel for things. It gave me a certain piece of mind for whatever reason. I felt more responsible. I felt like I'd done a better job for the executor.

Get one of these binders together. Yeah. And it can be physical. Nothing wrong with that. There's lots of platforms that are coming out now that have a digital form of this, there's some excellent ones. We see quite a few of them. My only concern with that is you have no control over whether that digital platform is going to be around in 20 or 30 or four years when your executor needs it. So I would still probably download the information

onto either something that can be read digitally in the future or print it. I mean, it might be one of those situations where paper is still king. And then the last thing I would say about what your executor might wish that you would do is we already touched on talking to them, talking to the executor, but talk to the beneficiaries too and make sure there's expectations set that are, because otherwise you're putting an awfully big burden on the executor if there's any surprises whatsoever in there. Yeah, people don't do this enough. They struggle with it. They don't want to do it ahead of time, but I think it's really important to talk to the beneficiaries. The other conversation that people should have more often is, why did you choose this person as

executor. So if there's three kids and you've only chosen one, it's best to explain it. Otherwise, the bitterness gets directed towards the person who was chosen. And you start out in the wrong foot. And again, it's more likely to go downhill from there. So all of these conversations, hey, they are a little bit awkward in some cases, but they're important to have another responsible thing to do for the executor. So I couldn't agree with you more and all of that. Okay, I'm got to wrap up soon. We've gone on a long time. I want to give you a chance to sell a little bit. We don't normally do that one of the things you do, and I'm not doing it because I like you, I'm doing it because I find Canadians don't know much, if anything, about it. So obviously, as Royal Trust, you can be a

corporate executor. That's a big part of your offering if people don't want to choose an individual. They go to a corporation. As you know, I've been a fan of that for 30 to 40 years because I've said it's too much of a burden for people. And with complex estates now, it makes sense to more to have experienced professionals. But that's not what I want to talk about today. It's the other service that you and your competitors offer is the agency business. Can you walk through listeners? Because most Canadians don't know about this. So effectively, like you said, if we act as corporate executor, we're named in the will and it's our job to do all the things that we talk to today and then some, like everything that the executor does. If that's not the case, we already have

the infrastructure, the knowledge, the contacts, the checklist, the letters. We put all of our knowledge to use for our clients who are themselves named as the executor, but they don't want to do the job, or they don't have the capacity or the bandwidth to do it. Maybe they live out of the province or worse, out of the country, or they simply, their lives are just too busy. So we can do as much or as little to help them out as they feel that they need. And you're right, not enough people know about it. I also find it very curious that this role of being the executor, and maybe it's because it's the last ask that the loved one had of you, but it seems to be this last vestige where we cling to doing it ourselves, as opposed to reaching out to the professionals.

We hire professionals to do everything else in our lives. I just watch your dog go by. And he might have benefited from a professional dog trainer at one point. Yes, we did not do that. So that's not a good example. But why not use the professionals in this case that do this all day every day. And sure, there's a fee, but you're, you don't want to think about what's it going to cost you. You're going to think what's the value that it brings to you is that what's your time worth? What's the creep for it? So thank you for the opportunity to talk about it. It's clearly something that more people need to better understand. And I do think that as we go through the next couple of decades and we see our aging population and the massive intergenerational transfer of wealth is going to

happen. I do think more people might start to talk about it as their own friend groups, like you like to say, start talking about how challenging it is to do this on their own and how much time it takes. And there's an emotional toll to it too. The executor is often the common bad guy. And they have to do things to follow the rules and to follow the law. And there are delays that are not the executor's fault. But beneficiaries don't understand all of that. And so sometimes it's easier to have a professional, a neutral third party in the mix that is able to be that voice of reason, that person who's doing the communications, that's setting the expectations and so on. Okay. Now, for our listeners, Leanne is completely biased than everything she just said, but I want to go on record as saying, I agree with it. You know, and so I'm supportive of it. I've just seen too many mistakes made by executors. Look how much more complicated estates are.

Now, obviously, a lot of you have straightforward estates. You said, I don't need that. And that's fine. I get it. But we're seeing. blended families, whole coes, foreign real estate, private companies, and a lot of cases, people have all of the above and more. Are you kidding me? This is not a DIY time. Your job as the executor is to honor the wishes of the deceased to the best of your ability. That requires getting some professional health in some cases, not in all, but in some. And I think it's interesting again, you're bang on when you say people almost cling to,

no, I've got to do this myself because that's what they wanted, no, they wanted their wishes honored. That's what they really wanted. So I agree with you in all of this. And so even though you're biased, you're not wrong. If you're in a situation as the testator, the person making the will, and you want to give your executor a little bit of breathing room or a little relief, give them the authority in the will to hire someone. I mean, you can name who it is you want them to hire, but you don't have to. And because it's permission.

And I think it goes a long way. Yeah, no, that makes sense. Okay. Our last one of the day, you know, this has become a bit of a bugaboo with me. People are not giving enough thought to whom they're appointing as their power of attorney. They're not actually sitting back and going, does that make sense from every different perspective? We've tried to put out a lot of videos on the wealthy barber channel about all the things you need to think about because I'm watching in real time again, mistakes being made. Like you need, for example, on the personal care front, that person has to be decisive.

They can't be a wishy-washy person because some of these decisions need to be made relatively quickly in a hospital, etc. Any advice there for what they need to think through? Well, personal care and property are the two things that need to be thought through. And they don't need to be the same person. And often they're not. And it might be better if they're not. So different considerations, I would say, for the different roles. We tend to focus and talk more about property because that's what we do and what we know.

And I would say all the things that we talk about when it comes to executors or trustees apply equally to powers of attorney. This is the person who is literally your substitute decision maker. They are stepping into your shoes financially with respect to every asset and every liability that you have. It's just you're no longer able to make those decisions yourself. And so you've granted entire authority to someone else to do that on your behalf. So it needs to be the right person. It needs to be someone that you believe has the. acumen and maybe it's the decision making authority. And the honesty. That's for sure. And the honesty

and attention to detail. I mean, they may be called upon to pass their accounts with the court, much like a trustee or an executor could, which means they have to be able to prove every dollar in, every dollar out, every dollar. So they have to be fastidious with their records. And there has to be none of this sibling issue either, right? I mean, if there's going to be a rub, it's going to come with who was and who wasn't aimed at paraturing. And now mom and dad are still alive. And so we work with elder caring experts, for example, who talk about this gets so contentious from a care perspective

that the parent sometimes almost gets effectively held hostage, like moved out of their home and into the kids' home. And it becomes a control issue. So thinking it through, but again, back to that earlier conversation about talking about it and making sure everyone knows what the plan is and why. And there aren't these surprises and the fights that they have to have, can happen while everyone's in a state of calm and we haven't had the crisis yet. But once

crisis hits, there's all sorts of other emotions running high because mom or dad has lost capacity or there's been an accident or there's been a major stroke or something like that. Struggling to figure out the sibling dynamics and why this person was named and this person wasn't is not the right time in a moment of crisis. So yeah, I'm 100% with you. I may have said this before, but when we did our survey a few years ago, We had 51% I think of the population saying they didn't have a will. And we had 65% of the population saying they didn't have a power of attorney, which tells me one of two things.

Either their lawyers aren't doing a good job because if you have a will, you should have a power of attorney at the same time. Absolutely. Absolutely. Or their lawyers did the job, but the person has no idea of power of attorney. And so that's more likely, by the way. I agree. But it tells me that they haven't given it a single thought, right?

Yes. So this isn't a performance. functory exercise anymore. We have increasing instances of age-related cognitive impairment that is only going to continue to increase unless something nature happens in our health system. And we're going to have three times as many people that need to act under powers of attorney in the next 20 years or so than we have today if the stats play out. So you need to think about this. That was a great answer. You hit on so many good points there. I love the fact you're talking about having the conversations about the choices when you're calm and how it tends to work better.

Every expert says the same thing. I said that was the last question. This is an add-on. It's interesting how the true experts, people like you, don't love co-power of attorney for personal care. Because again, especially if there's two, you can get a divide where nobody can make a decision and you get frozen. I've spoken out against them quite aggressively influenced by four or five real-life scenarios

where we're going, what the heck, this is nutty. Like I really don't like them. Again, what are your thoughts on it? Yeah, I mean, co with two, if there's any likelihood of disagreement, is not good in any of these appointments because there's no way to break the logjam. So if you're going to have two, it would be good to have a bit of a mechanism. And there are final say clauses. Yeah, there are some final say clauses. My father, by the way, has recently volunteered to be my power of attorney.

Oh, he's convinced that he's in good. shape and he'll be around and he can marshal things through and knowing him, you probably will be around. That's the scariest part of this whole thing. You've met him. You've dealt with him. He's a character. Well, you know he'd make very fair decisions. That's very true. He would butter charts for everybody from day's money. That would basically be the decision he would make. Anyway, it's been great having you back on. You know, I'm a huge fan. As I said off the intro, you're one of the nicest, kindest people that I've ever crossed paths with and your expertise is second to none. So thank you so much for be joining us. Well, thank you for having me and I can say right back at you on all the kind

words. Thanks for having me and I've enjoyed our conversation again.