Estate Planning for Canadians

Canadians taxation and estate planning

If you have assets which will be sold at your demise, you are liable to pay the deemed disposition tax. When a person dies, the CRA considers that the person has disposed of all capital property right before death. The CRA calls this a deemed disposition.

If your assets are transferred to the surviving spouse then this tax can be deferred. Also this tax can be deferred if the assets are kept in a spousal trust for the up keep of the surviving spouse. But in a situation where the surviving spouse sells from the assets then the tax will apply. At the death of the surviving spouse, and the assets are inherited by their heir, 50% of capital gains on the assets are taxable at the personal income tax rate.

Last Will and Testament- Canadian

If you die without a will it will be said that you died intestate. This has major consequences that accompanies it. A will help you monitor the channels which your estate passes through even when you are no more. The benefits of a will can’t be overemphasized, some of them are

  • Having a will gives you the opportunity to decide those to inherit your estate when you are gone. You get to choose who to get what. It helps to keep your estate from does that you don’t wish to have a share in your inheritance.
  • Will makes it easier for your heirs to get access to your estate as everything would have been put in place by you.
  • Will also presents you with the opportunity of donating your estate to charity. This can’t be possible when you do not have a will as family members won’t know of your desire to donate your estate to charity.
  • In your will you can specify whom to look after your children whereas, in the absence of a will, this decision will be made by the court.

If you reside in Canada and you die without a will, the following are applicable.

  • The province you reside will determine what happens to your estate. This is in accordance with the intestacy law.
  • Your first $50,000 will be given to a surviving spouse – if any-
  • The rest of you estate will be shared and distributed among your spouse and kids.
  • If you have no spouse or kids then your parents will be the next set of persons to get your estate.
  • The court will appoint a bonded administrator who will serve as an executor for the state.

Dying without a will can cause delay in the distribution of your estate among your loved ones. It can also cause them to make lots of unnecessary spending. Your will name the executor whom you have chosen to run the affair of distributing your estate. It is important to note that a will does not contain your funeral plans. This is because, your will can only be opened after your funeral. So this is filed in a separate document.

Power of attorney

These documents allow you to name any person of your choice who will be responsible for your financial and medical care if you ever become incapable of making such decisions for yourself. This person is referred to as attorney – in-fact or an agent.  Your power of attorney could be in charge of paying bills, filing tax returns, opening mail, banking, talking with accountants and lawyers, looking after pets, etc. You can name a financial power of attorney and a medical power of attorney.

Financial power of attorney: This person will be in charge of making financial decisions on your behalf. He can make investments on your behalf.

Healthcare proxy: This person will be in charge of making decisions relating to your medical and health care. He will make sure your wishes as to the type; pattern and extent of treatment are properly followed.

Simplifying estate planning using a trust

A trust lets you transfer assets to your beneficiaries. This is what a will does as well. For a trust you can transfer these assets while you are still alive but for a will, it is only at your death that this transfer will become valid. With a trust you can avoid Probate and save your heir stress. A trust can still be a way around tax payment.

As a resident of Canada, you need a professional attorney to guard and help you plan your estate in accordance with the state laws of Canada. Our attorneys are always available for consult and hire.

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