|
 The
Money Management Newsletter: Taxes
and Estate Matters
What you need to know about Estate Planning
and More…
Part 1: Death and taxes - two certainties of life
Compiled by David Newman
Money Management Newsletter, August 2005
There are no estate taxes or succession duties in Canada. However,
taxes upon death have not disappeared. When a person dies, there is a
'deemed disposition' of all capital property. What does that mean? It
means that the government treats all your property (unless jointly held)
such as stocks, bonds, RRSPs, real estate, etc as sold at fair market
value on the day of your death. Your estate will be required to pay capital
gains tax on that property. This applies to your RRSP if you do not have
a spouse to whom you can transfer it. Careful planning can reduce or defer
the taxes owing. Without an estate plan, you could lose nearly half of
the value of your gains to taxes. While your Executor may claim full personal
exemptions on your final income tax return, your estate may end up paying
taxes at the highest tax rate (over 50%). If you do not have a Will, or
if your Will has not been updated recently, it may be a good time to get
the job done to avoid tax complications.
What is Probate?
'Probate' is the recognition by the provincial court of the validity
of your Will and the appointment of the person named as your Executor.
Granting of the 'letters probate' is notice to the public that your Will
complies with the basic formal requirements and that the Will was not
being challenged at the time of application.
Reducing Probate Fees
In some provinces, the Executor must apply to the court for 'letters
probate' in order to begin administering an estate. These fees are payable
to the provincial government based on the value of certain assets in your
estate. There have been increases over the years in provincial probate
fees. There are ways to arrange your affairs to reduce these probate fees.
Again, estate planning helps identify these issues and reduce any negative
impact on your estate.
It sounds complicated!
Estate planning need not be complicated or expensive. First, who knows
better than you what you want done with the things that you've worked
all your life to build. Second, seek the professional advice of an expert
to guide you on the financial and legal implications to ensure that you
get the most favourable tax treatment possible.
If you do not have a Will, or if your Will has not been updated recently,
perhaps it is time to meet with a lawyer and get the job done.
Fiscalagents.com Site-links:
Death and taxes - Everyone knows
that life has two certainties: Death and taxes. Fewer know the two often
coincide.
Taxes & Estate
Matters Newsletter: Articles for those looking toward the future,
a source of information on many aspects of planning an estate and managing
taxes.
Taxes and Estate - Companion Advisor
section: Bulk up on your tax and estate planning knowledge while learning
how to make the most of the money that you earn.
Learning Centre - Estate Planning:
The cornerstone of estate planning is the Will and, if needed, the Power
of Attorney documents. These, along with an understanding estate planning
objectives, such as the tax consequences to the deceased's estate, are
integral to the Estate Planning process.
Editors Notes: These articles
are only covering some of the areas that need examination when drawing
up an estate plan. If you do not have a Will, or if your Will has not
been updated recently, perhaps it is time to meet with a lawyer and get
the job done. Special thanks to (NC) and Ontario March of Dimes
Getting Advice: We believe that a "Will" requires careful planning
to ensure all essential matters are covered. It should also be reviewed
periodically and discussed with a qualified adviser or team of advisers
to incorporate any changes in your personal circumstances.
Notice: Fiscal Agents Financial Services Group are not engaged in rendering
tax, accounting or legal professional services or advice. The comments
in this newsletter are not intended, nor should they be relied upon, to
replace specific professional advice. Before acting on material contained
herein. Readers should seek advice that is appropriate to their personal
circumstances from a professional advisor.
*
* *
|
|
Use this link to load a printer-friendly
version of this document. |
Have a question regarding
this article? Use our feedback form
to send us a note.
©
, Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.
(905) 844-7700
|
