Help from an Accountant/Tax Advisor:
Avoiding Costly Oversights

When you die, unless your property transfers in a spousal rollover, the Canada Customs and Revenue Agency will tax your estate as if you had sold all of your capital property – including stocks, mutual funds, business interests and real estate (excluding your family home). Income taxes also become due on any registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) still held at death, as these are also deemed to have been cashed immediately before you died. In short, your estate could end up with a substantial tax bill that requires the sale of some of your most valuable assets to pay for it.

Your personal goals and wishes for your estate are more important than concerns about taxes. However, by ensuring that your professional team includes an accountant/tax advisor who is familiar with tax law, you can do several things with your estate at the same time, including:

  • undertaking a program of financial planning that will maximize your wealth;
  • ensuring that your estate is distributed to succeeding generations as you wish; and
  • minimizing tax costs to you during your lifetime and to your estate at the time of your death.

When it comes to tax planning in an estate, there are no standard solutions or universal remedies. Your accountant/tax advisor, working with your lawyer, and your insurance and investment advisor, can help you to:

  • assess the tax cost associated with your asset holdings – assuming nothing changes, and forecasting various other likely scenarios (a review of your will is normally undertaken at the same time);
  • determine how your potential liability for taxes can be reduced;
  • plan for the payment of taxes on your estate without depleting the estate;
  • minimize taxes both during your lifetime and on your estate at death.

The nature of the planning required to address tax concerns ranges from the relatively straightforward to quite complex, depending on the extent of corporate interests and other assets.

Typical accounting and tax planning for estates may include such steps as:

  • reviewing the adequacy of your insurance;
  • considering spousal transfers;
  • implementing an estate freeze on your business so that future increases in value are attributed to your heirs;
  • planning your estate to dispense RRSPs, RRIFs and non-registered holdings in the most tax-expedient way possible;
  • ensuring that your business holdings qualify for all applicable preferential tax treatments;
  • reviewing the use of trusts in light of your circumstances;
  • considering of tax-preferential gifts or bequests

Each accountant and tax advisor who is a member of the Estate Planning Council of Edmonton plays a vital role as a member of your team of professionals, ensuring that the value of your estate is maximized in light of your own personal goals and wishes. The designation of chartered accountant (CA), certified general accountant (CGA) or certified management accountant (CMA) is required of any accountant member of the EPC.

Estate Planning Tip:

Ultimately the solutions suggested by your accountant/tax advisor will be tempered by your wishes, some of which may be contrary to the most tax-efficient options available. Your accountant can help you understand the tax costs associated with attaining your personal goals, and provide you with options to minimize that cost.