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Question 1 of 30
Alessia Petrova, a 70-year-old widow, seeks your advice on structuring her estate plan. Her primary assets include a portfolio of publicly traded securities valued at $1.5 million and a vacation property worth $800,000. Alessia is concerned about minimizing probate fees and potential capital gains taxes upon her death, while also ensuring her two adult children, Dimitri and Anya, receive their inheritance efficiently. She is generally in good health but wants to proactively plan for the future. You are tasked with recommending the most suitable trust structure, considering both immediate and long-term tax implications. Which of the following approaches represents the MOST comprehensive strategy, considering Alessia\'s objectives and the relevant provisions of Canadian tax law and estate planning principles?
Establish an alter ego trust to hold both the securities portfolio and the vacation property, thereby deferring capital gains taxes until her death and avoiding probate fees on these assets, while also incorporating testamentary trusts in her will to manage the distribution of any remaining assets and provide for potential income splitting among her children after her death.
Transfer all assets directly to Dimitri and Anya as joint tenants with right of survivorship, simplifying the estate administration process and avoiding probate fees altogether, but potentially triggering immediate capital gains taxes on the transfer of the vacation property and exposing the assets to the creditors of her children.
Create a testamentary trust in her will to receive all of her assets upon her death, allowing for potential income splitting among her children and enabling customized distribution schedules, but subjecting the estate to probate fees and potentially delaying the transfer of assets to her beneficiaries.
Implement a combination of inter vivos gifts to her children, up to the annual allowable limit, and purchase a life insurance policy with a death benefit equal to the estimated capital gains taxes payable upon her death, thereby reducing the overall estate value and providing liquidity to cover any tax liabilities, but potentially incurring gift tax implications and requiring ongoing premium payments.

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