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. | Estate Conservation
Although there are currently no inheritance taxes or death duties in Canada, your estate may still be subject to a number of taxes, fees and costs that will reduce the value received by your heirs. The idea behind estate conservation is to minimize the erosion of your estate by income taxes, probate fees and other costs of estate administration.
When you die, your capital assets will be treated as sold. The accumulated value in those assets over and above the cost associated with obtaining those assets will be subject to tax. Covering capital gains tax liabilities is key to the conservation of your estate. Also, when you die, your assets form the property of your estate.
In order for the executor of your will to manage and distribute your assets, the will must be probated. Probating of a will certifies that it has been proved through court process and confirms the authority of the executor named in it. The process causes delays and is subject to provincial fees. Generally, probate fees are levied against the total value of the estate submitted by the executor after an inventory of your estate assets. These fees can represent a significant cost for large estates and recent trends have seen these fees increasing.
There are succession and estate planning techniques for reducing the erosion of your estate by probate fees. These can include:
- joint ownership of assets;
- designated beneficiaries under life insurance policies;
- the use of inter vivos trusts; and/or,
- gifts made in anticipation of death.
The tax consequences of these techniques should be examined before undertaking any of them. For more information on how you can conserve your estate for your family, contact us for a Manulife Financial representative in your area.
We offer planning expertise for affluent clients
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