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on the terminal return (based on the $23 price), the executor can amend the return and get a par- tial refund. CRA says you can only do this within one year of death; after that, there’s no relief.
Use ’em or lose ’em
“Ensure the executor knows the plan exists,” says Friedman. “You don’t want him or her to discover it several years later.”
It’s not just a matter of losing the 164(6.1) credit, Pinsky explains: “TSX Venture Exchange rules say that if someone that has options passes away, those options have to be exercised in one year, or they expire.”
That can mean the estate would forfeit hun- dreds of thousands, even millions.
The TSX doesn’t have this rule, but many TSX-listed companies have their own rules limiting the post-death exercise period, notes Friedman. “Frequently, when an employee passes away, the employer is sensitive to the fact that the estate has to be administered, but they don’t want to have to deal with the estate for years and years.”
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Couples head down the aisle filled with optimism, and few embarking on this journey want to acknowledge they could one day split.
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Executors should exercise the deceased’s options within a year after death.
He urges clients to inform executors whom they should speak with at their companies for plan details and instructions on how to exercise options that vest on death. “That way, they’re not run- ning around trying to find someone” to help them settle the estate. AE
PRIVATE COMPANY STOCK OPTIONS
Tax rules for stock options on Canadian-Controlled Private Corporations (CCPCs) are even more favourable than for public companies, notes Michael Friedman, a partner at McMillan LLP. With public company options, there’s a taxable benefit when your client exercises them. Not so for CCPCs: tax is deferred until your client sells the shares. The exception is death; in that case, the benefit must be recog- nized on the terminal return.
Another key difference: a client can’t qualify for the 110(1)(d) deduction on public company options if the op- tions are in-the-money. With CCPCs, “you can get the 50% deduction on options that are in-the-money, as long as the shares have been held for two years.”
A Worksheet contains scenarios for clients to discuss
PLUS: When you see the C icon in Advisor’s Edge, Advisor’s Edge Report or
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Four Social Shares give you a new way to tell clients you’re prepared to talk
A Presentation walks you through how to write
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A Checklist ensures clients have wills
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Three Conversation Starters outline why pre-nups are key to protecting your home, and why newlyweds need insurance
A Planner guides you in setting up a pre-nup workshop
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®Renaissance Investments is offered by and is a registered trademark of CIBC Asset Management Inc.