Estates & Trusts
Estate & Trust Services
Preserve your wealth for your beneficiaries, not the tax man
Our team of trusts and estates professionals have over 35 years of experience dealing with final tax returns of deceased individuals.
When someone passes away the CRA deems all of their assets disposed of on the day of death at fair market value. The deemed asset disposition may result in income taxes and there are strategies to minimize this event. Typical assets that may need to be reported are the primary residence, rental real estate, business assets, RRSP & RRIF investments, mutual funds and marketable securities.
Filing of Tax Returns
The Executor will need to file the final tax return of the deceased by April 30 or if the date of death occurs after October the final tax return is due 6 months after the date of death. The Executor is charged with dealing with the deceased’s assets and will report the realized disposition of the assets on a Testamentary Trust tax return. A Testamentary Trust is required to file a tax return within 90 days after the anniversary of the date of death. The return would report any income earned during the period. There may be an opportunity to allocate out any income earned to the beneficiaries depending on the terms of the Will.
Should you be acting as Executor or Administrator of an Estate you may wish to apply for a Clearance Certificate. A Clearance Certificate confirms that an Estate has paid all amounts of tax and lets the Executor/Administrator distribute assets without the risk of being personally responsible for amounts the deceased may owe.
A trust is a legal entity that can be set up to help in achieving your estate planning goals. There are several different types depending on the purpose and timing of when they are set up. We work with your lawyer to establish the ideal trust for your situation. Often we can reduce the estate taxes or inheritance taxes using a structure involving one or more trusts.
Family Trusts – These can be used to distribute income from a private corporation among family members. These structures have worked well in the past but new proposed legislation is challenging them. See our recent news article.
Testamentary Trust – This type of trust is automatically created upon the death of an individual in Canada. There may or may not be a necessity to file returns for a testamentary trust. It is best to contact us so we can discuss your particular situation.
Alter Ego Trust – can be used to segregate certain assets to be left to specific beneficiaries of the trust. This can be a very powerful tool as any assets held by an alter ego trust are outside of the will and the estate.
Other Trusts – There are a multitude of trusts that can be set up depending on your personal situation. Let’s have a discussion if you are thinking a certain structure is right for you and your family.
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Estates & Trusts FAQ’S
The most frequently asked questions about estates & trusts services.
- No. There is no estate tax in Canada or Succession Duties in British Columbia. Depending on the size of the estate there may be probate fees to be paid.
- The three important documents are, firstly, the Will to deal with your assets upon your passing.
- Secondly, a Power of Attorney should you wish to allow a corporate trustee or individual to administer your assets, should you wish them to do so at any time, or should you become mentally incapacitated.
- Thirdly, a Representation Agreement, or Advanced Health Care Directive to an individual(s) to attend to your physical care should you not be able to do so due to illness, accident or mental incapacity.
- Have a spouse or common-law spouse?
- Have any children?
- Have any investments?
- Wish to give money to a friend or charity?
- Own a home or business?
- Wish to pass along family possessions or heirlooms?
Of course, you may have other reasons for requiring a Will and your personal situation will determine this decision.
- A Will must be in writing.
- A Will must be signed by the Will maker, who must be mentally competent and at least sixteen years of age.
- Signing of a Will requires the presence of two adult witnesses, both of whom must sign the Will in the presence of each other and the Will maker.