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Estate planning: Taxes and passing assets to heirs

On Behalf of | Jul 2, 2021 | Estate Planning

The old adage says that nothing in life is certain except death and taxes. That holds a lot of truth, and what Ontario residents should know is that if they aren’t aware of how taxes can affect their estate planning, their heirs may suffer. It’s important to have some understanding of how to minimize the disposition tax on an estate to give your beneficiaries the assets you intend for them. 

Need-to-know information

There are some pertinent takeaways when it comes to disposition tax: 

  • If you die intestate (without a will), you should know that the province will decide how your assets will be distributed. 
  • Disposition tax is deferred when held in a trust or transferred to a surviving spouse. 
  • Creating a trust allows you to transfer assets while you are still living, thus side-stepping probate costs upon death. 

Final tax return

Your appointed executor will be responsible for filing a final tax return on your behalf. Capital gains incurred by the sale of investments are included in a final tax return. That return also includes the value of any investments and retirement accounts.

With proper planning and the help of an estate planning lawyer, it may be possible to minimize taxable income. A trust may also simplify estate planning and minimize taxes. 

If done properly and comprehensively, estate planning can manage the effects of taxation on an estate. A lawyer can help to further explain the value of estate planning tools such as a will, a power of attorney and a trust. A thoughtfully executed estate plan can enable you to leave as much as possible to your loved ones.

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