The two certainties in life: Death and Taxes

It has often been said that the only certainties in life are death and taxes.

There is no denying that everyone is going to die at some point. And death has implications for their estate and surviving family members.

The income tax liability that arises during death can seriously erode an estate.

When a person dies, he is usually deemed to have sold all of his property at fair market value. If the estate does not have enough money to pay the income tax, the executor will have to sell the assets that were intended to be left to the beneficiaries.

The RSP works in the same way, upon death, the registered accounts are de-registered which means the full amount will be taxed at the person’s marginal tax rate.

So how do we ensure that we mitigate the possible repercussions of death in our finances?

A good financial plan, with tax strategies that mitigate these repercussions are usually the number one way of handling the two certainties in life.

It is easy to close our eyes and pretend all will fall in place after our death.

The honest truth: You will never know what issues have been caused due to lack of planning from 10 feet under the ground. 

So take care of things while you stand on it.

Sincerely,

Your concerned Advisor

Henna Dua