Your estate may encounter certain obligations for income tax and probate fees on your death, which may reduce the proceeds intended far, the beneficiaries of your estate. If any part of your estate must go through probate to validate the will before transferring ownership of assets - it may me subject to probate fees.
5 KEEP IT IN THE FAMILY
To
minimize income taxes and probate fees payable, there are ways to
distribute assets to your heirs out of your estate. The key is to
reduce the value of your estate. The simplest way is to ensure you
have designated beneficiaries for RRSPs, RRIFs, annuities, life
insurance policies and GICs issued by insurance companies so that
assets do not form part of your estate. (5)
Institutions may not be required by law to have executors file for
probate to transfer the proceeds if there is a designated beneficiary
named. Keep your beneficiary designations up to date since these
assets are distributed according to the last beneficiary designation
on record. If your spouse is your beneficiary, consider adding an
alternate beneficiary to cover the possibility that you both die
at the same time. Here are some other options that may or may not
apply to your circumstances:
5 ESTABLISH JOINT OWNERSHIP WITH RIGHT OF SURVIVORSHIP In this case, property passes to the survivor by law rather than through the will. Since the jointly held asset does not form part of the first joint owner's estate, the need for probate on jointly held property and the payment of probate fees is eliminated. 5 LEVERAGE INSURANCE Some insurance products provide a straightforward alternative for minimizing probate fees. GICs issued by insurance companies are actually annuities and are eligible to be paid directly to designated beneficiaries rather than passing through the estate. This eliminates the probate fees that are payable on the GIC. You may want to consider additional life insurance to cover administrative and tax liabilities. Cash generated from insurance policies is also a reasonable solution for generating liquidity to cover probate fees, tax liabilities and other debts payable at death. Whenever capital is required at death, life insurance should be a key estate planning consideration. Life insurance solutions, however, are contingent on the individual's age, health and insurability, as well as the ability to pay the annual premiums. 5 PREARRANGE FUNERAL
Prearranging
funeral plans will eliminate costly purchases by grieving family
members. Anyone who has arranged funeral plans knows the stress,
confusion, pain and potential for added costs that can result from
last minute preparations. Pre-planning funeral arrangements can
drastically reduce costs. It also allows for family input, ensures
that your wishes are followed and relieves family members from having
to make decisions at a difficult time.
5 MINIMIZE TAXES PAYABLE ON THE ESTATE Income taxes are for many estates the single greatest liability on the balance sheet. In fact, where assets are not transferred to a surviving spouse, many people and their beneficiaries are surprised to learn that the received value of an estate is substantially less than they thought because of taxes payable on it before distribution. The two largest tax bills generally result from the deemed disposition of investments. In the case of an RRSP account, the balance is paid out and is taxed to the estate as income. For non-RRSP investments, taxes must be paid on all the unrealized gains of the investments. Often the greatest gains are realized on property other than an individual's principal residence (a family cottage, for example). A ESTABLISH A LIVING FAMILY TRUST By transferring assets to a living trust while alive, the assets are removed from the estate and therefore reduce the value of the estate subject to probate fees. This also ensures that the testator maintains control over the assets transferred to the trust. The planning actions referred to here may have adverse tax consequences and may not be in keeping with your financial goals. We recommend that before you implement any of the suggested actions, you get financial and legal advice. 
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Fiscal Agents
