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 YOUR ESTATE MATTERS! By James A. Cottreau FRPA Pundits make time worn, but very true statements. A certainty of life is death and taxes. This statement is true yet every taxpayer is in control of the degree of the “tax bite. Death creates tax issues yet many taxpayers are reluctant to enter into tax planning that recognizes their death. They seem quite prepared to leave financial problems rather than financial security. Perhaps some people feel that to acknowledge the reality of death is to hasten its timing. General Overview We do not have succession duties or estate taxes in Canada but we do have something called “deemed disposition” of capital property. Deemed disposition means that Canada Revenue Agency treats all of your property, not jointly held, such as RRSP’s, real estate, stocks, bonds etc as being sold on the day of your death. Capital gains taxes are then added to your income for the year. Without an estate plan it is possible for your beneficiaries to lose almost 50% of your estate. If you have not undertaken tax planning in advance, the results can be very expensive and complicated. In comparison, tax planning is not complicated nor expensive Some General Tips - - Make sure you have a written plan of your wishes - Make sure you have a will - Make sure all your valuable papers in one place - Make sure you have sufficient life insurance to cover the needs - Make sure your investments “joint and several with right of survivorship - Make sure there a beneficiary for your RRIF or RRSP in your will - Make sure there is enough cash on hand to handle immediate bills after death - Make sure you have a written schedule of your assets - Make sure you have advised your Executor or survivors to seek out a particular person Conclusion As our lives become more complicated we need to address realities. We need to take the time to manage our affairs, while we have time. Note – James Cottreau FRPA, is a Senior Partner with Atlantic Canada Taxman devoting much of his time to tax issues
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