I recently received an email from a respected CPA with the following content, “I don’t see many of my clients in Alberta using a Joint Partner Trust (JPT hereafter) as there is minimal tax benefit of doing so, and because the probate fees in Alberta are so low”.
Based on this comment, it is not surprising that JPT’s are somewhat rare in Alberta.
Why is this?
Well, generally speaking, financial structures are sold, not bought. Historically, it has been easiest for financial professionals to recommend or sell financial arrangements that either reduce tax or increase returns.
But what if the “returns” of a financial arrangement are more nuanced? What if the benefits of a structure include the following?
- A dramatic reduction of the time it takes to settle an estate.
- A proactive engagement and financial education of adult children, without the emotional burden of losing a parent.
- A reduced likelihood of family conflict.
- A gradual and successful transition to financial administration support.
How do you measure the benefit of these things relative to reducing tax or increasing returns?
I don’t know for sure, but when I speak to my mature clients, who are long since past the point of worrying about financial independence and ask them, “would you rather increase your investment returns or reduce the chance your kids will scrap about the estate?”. Their answer is not about increasing returns.
It is about simplification, easing the burden, and reducing potential conflict.
So, if there is little tax or probate benefit in Alberta to have a Joint Partner Trust, who recommends these structures to clients for consideration?
Does the lawyer initiate the discussion? Rarely.
Does the CPA begin the conversation? Not that I have seen.
Does a professional insurance person start the talk? Nope.
I propose that the person in the best position to initiate a discussion with clients about the potential benefits of a Joint Partner Trust is the family Financial Planner (think CFP or R.F.P). The planner’s job (Fiduciary Duty for the R.F.P.) is to understand the full scope of a client’s objectives and bring alternative solutions to the table to help the client family meet their goals.
Too often, the extra work involved in setting up a JPT for a family is considered extraneous to the planning role. I hope this trend reverses itself as JPTs become more widely recognized for the non-tax, non-return benefits that they can bring to families.