There are no official inheritance taxes or estate taxes in Canada. But after your death, your loved ones could be hit hard anyway with a surprise tax bill and other fees. And you will suddenly have made yourself a new best friend: the taxman.
How can you keep the costs of your estate lower – and leave more to the people and places that are important to you? Here are four key things you need to know to start planning:
- What taxes and other costs may be due when you die? Hint: there is no inheritance tax in Canada, but if the value of your property or investments has gone up, watch out.
- What happens to your unsheltered savings and investments after your death? Who will own your stocks, bonds and mutual funds, for example?
- What happens to your savings and investments in a registered plan? Does the plan stay open or will it be wound down? Where does the money go?
- What happens to your life insurance policy when you die? Are any taxes due on the money it pays out?
Once you understand the rules, you can take steps to reduce taxes and other costs after your death. In some cases, it’s as simple as naming someone in your will to receive an asset, such as a retirement plan. There are also special strategies – including family trusts -- if you have a large or complex estate. Learn more now
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.