Trust and Estates - Final T1s and Trust T3s

We will help you take advantage of opportunities and avoid pitfalls to help you reduce your terminal tax bill and maximize what you leave to your children and grandchildren.

Estate planning is the process of managing your financial affairs such that you achieve your financial objective either upon death, or so that your wealth transfers to your beneficiaries in the most efficient manner possible.  One of the biggest components of estate planning is to minimize taxes to the extent possible to preserve as much wealth as possible to either enjoy while you are living, or pass to your beneficiaries.

Failure to do any estate planning can easily result in half of your estate being paid in tax. At the very least, each estate plan should:

  • Have an up to date and valid will

  • Ensure there is adequate life insurance - to help pay for funeral arrangements and taxes - especially if there are not a lot of easily sold assets in the estate

  • To reduce probate fees, naming beneficiaries on life insurance policies, and registered savings plans (RRSPs, RRIFs, and TFSAs)

  • Make funeral and cemetery arrangements

If you own a business, the need to plan your estate and plan your succession is even greater. You should consider:

  • Whether it makes sense to set up one or more family trusts

  • The potential for an estate freeze

  • Detailed plans for the succession of your business.

Estate planning is not only for the wealthy.  Over the last few decades, there has been an enormous accumulation of wealth - whether in the form of your family home, a cottage or vacation property, or registered and unregistered savings plans. These investments and savings vehicles were designed to allow you to accumulate wealth on a tax free basis over many years. But sooner or later, the CRA expects to collect tax on all of that accumulated wealth. 

As an example - if you have an RRSP and a RIFF when you die, the entire value of the RRSP and RRIF are included in your final return.  That could add up to hundreds of thousands of taxable income and half will be paid in tax.    

Capital property (like investments and cottages) is another good example that people need to be aware of and plan for. There is a tax event triggered on death (called a deemed disposition) that requires you to report a capital gain on unregistered investments or real property and pay tax on the capital gain. This could become very problematic if you don't plan to sell the assets - there could be a big tax bill, but no cash to pay the bill.  Or you may be forced to sell an asset that you don’t want to sell just to pay the tax bill. 

If you've recently lost a loved one and you’ve been named executor, there's not a lot of opportunity to plan - however, the process to file all of the appropriate returns and distribute the assets of the estate is complicated and exhausting.  That’s when you need the expertise of a good accountant and lawyer to help you comply with all of the filing requirements and minimize taxes to the extent possible. 

I would be happy to help you and work with your lawyer on any questions you have regarding your particular situation. Please contact me and we can set up a free consultation.