Death and Taxes -Is One of These Actually Avoidable?

Tax, if not avoidable, can it at least be reduced?

At a minimum, it is the financial responsibility of your legal representatives, often named as the executor, to file a federal tax return for the testator’s last year of life. Keep in mind that there are multiple sources of taxable income that may apply after death. Releasing assets before a Tax Clearance Certificate is secured from CRA could cause the executor to incur that cost from their own pockets.

What can be done?

Depending on the types of assets and liabilities of the testator, pre-planning of the testator’s estate goes a long way towards reducing the stress and confusion of the executor’s moral and legal responsibilities.  

For example, the income tax after the testator's death may be more than associated probate costs or the liquid assets available to the estate’s legal representatives. These costs and other final expenses need to be calculated and monitored regularly by the testator and their professional team.  Utilizing the testator’s ECoH (Executor Cash on Hand) account and managing the available funds 

Consider talking with a Plan My Estate Coordinator to discuss ways to reduce the taxes and other probate and professional fees payable at death. You may be able to manage your assets to maximize the amount that goes to your beneficiaries. Booking an initial free consultation with a Plan My Estate CEA is the easiest way for testators to converse about their estate plan's needs and goals with a qualified Canadian Estate Coordinator.

You can read the following legislation to learn more about the laws that govern estates in your jurisdiction using the links in the chart below.

Jurisdiction

Legislation

Alberta

Estate Administration Act, and the Wills and Succession Act

British Columbia

Wills, Estates, and Succession Act

Manitoba

The Wills Act and the Family Property Act

Newbrunswick

 Devolution of Estate Act, the Wills Act, and the Probate Court Act

Newfoundland

Wills Act, and the Probate, Administrations, and Guardianship Rules

Northwest Territories

Wills Act

Nova Scotia

Wills Act and the Probate Act

Nunavut

Wills Act and the Probate, Administrations and Guardianship Rules

Ontario

Estates Act, and the Succession Law Reform Act

Prince Edward Island

Probate Act

Quebec

Succession Duties Act and the Civil Code of Quebec 

Saskatchewan

Administration of Estates Act

Yukon

Estate Administration Act