This Blog was written by: Robert Boyd
We have all read articles detailing how people have stash millions of dollars under their mattress or, executors discover vast quantities of gold discovered at the home of a recently deceased individual.
From an estate planning perspective, this may come as a huge windfall to the beneficiaries of the estate, but one has to wonder, what are the practicalities of dealing with the estate that uncovers hidden treasure?
Dealing with cash may be the easier of the two scenarios, as the estate can simply include the cash in the probate application and distribute to the beneficiaries. There will be no capital gains payable by the estate and the beneficiaries receive the cash on a tax free basis. The issues with holding such vast amount of cash are numerous:
- Loss of value over time due to inflation
- Opportunity cost of not investing the assets over a long period of time
- Possibility of theft, water or destruction by fire
- Lack of insurability
- Difficulty maintaining an accurate account
- Back issues from sleeping on a mound of cash
Gold, on the other hand is a lot trickier for an executor to deal with (I am referring to bullion and not the certificates). Although gold is a more durable material, the issues of holding vast quantities in your home are very similar to cash but it is not well known that selling gold is not as easy as one would think:
- Gold is not treated that same as cash and must be included in the terminal tax return of the deceased to calculate capital gains
- There is an onus on the beneficiaries to report any transfer of gold to the CRA
- When claiming or selling gold it may be a necessity to produce receipts detailing where, when and at what price the gold was purchased for. If the executor cannot find the receipts a financial institutions will insist on a specific mention of the gold and the quantity written into the deceased’s Will
- Gold may contain different gold content, particularly in jewellery, and it is important to have the purity level checked in order to avoid selling for under the market value
- Buyers may make varying offers to purchase, it is wise to seek 2/3 quotes