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.

Useful resources available at Fiscalagents.com

• The Learning Centre - Estate Planning: We all know of the two certainties in life - death and taxes. Estate planning is the process of strategising how, when and to whom, the proceeds of your accumulated wealth is distributed.
  
  
• Assemble a concise record of all your assets and their respective locations, along with other pertinent information. You can view or download our free booklet, The Cornerstone® Household Directory of Documents, which helps you with both the listing of your records and assisting your executor for locating and processing the terms of the will.
  
  
• Estate Planning User's Guide: Too often, estate planning professionals hear, "I wish I'd known about this sooner" from distressed family members. Whatever your status - male, female, married, widowed, divorced, single, young, old, middle class or wealthy - everyone needs estate planning. Unfortunately, too few people follow this advice. This estate planning guide will help you with this question.

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