Perhaps the most important professional advice for a spouse`s loan is tax advice to ensure that the strategy actually results in less tax to be paid by you and your wife. Here is an example of the spouses` credit strategy for a $200,000 loan at 2%. Suppose the spouse earns 4% through the investment of the loan proceeds and your tax rate is 48% and your spouse`s is 25%: John as a lender can make a choice in accordance with subsection 50(1) of the law to assign the outstanding balance of the loan for the product equal to zero and recover the loan to zero. This results in a loss of capital for John as a debt default, which allows him to transfer capital gains in the current year, in the last three years or to a future year. The ability to claim this choice usually depends on the financial situation of the debtor (in this case Mary) and the ability of his estate to repay the loan. As you can see, this may not be the best way to proceed for most spouses – repaying the loan may be the simplest and most direct method of settling Maria`s estate. The spousal credit strategy is useful for many families when it comes to tax savings. Death and adultery can sometimes complicate the client`s affairs, but the tax savings in developing such a plan cannot be ignored. Forward planning for the coordination of wills and the revision of estate plans ensures that the loan does not affect other estate considerations.. . . .
