If You’d Rather Leave Half Your Estate to Revenue Canada, Don’t Read This…
If you’re a property owner in Canada, especially if you're in your 60s and thinking about how your assets will be managed after your time, keep reading.
Imagine you’ve spent your lifetime accumulating significant assets:
? A mortgage-free house valued at $2 million.
? Two rental properties, originally purchased for $800,000, now worth $1.5 million each.
? $600,000 saved in your RRSP and $150,000 in your TFSA.
? A will directing that all these go to your two children.
What Your Children Will Pay to Revenue Canada
So, how much will your beneficiaries need to pay before they can inherit these assets? The #1 answer I hear is, "Nothing, we have a Will…"
Even if you have a will and your children are named as beneficiaries, the estate is still subject to taxes and fees!
In Ontario, your children’s potential liabilities (the money they will have to pay before they see a dollar from your estate) could include:
1. Capital Gains Tax:
? Taxable on rental property value increases.
? Estimated: $425,150 (50% inclusion rate up to the first 250k,then, it's 66.7%).
2. RRSP Tax:
? The entire $600,000 in your RRSP will be treated as taxable income in the year of your death.
? Estimated: $300,000 in taxes.
3. TFSA:
? This amount is tax-free and won’t be taxed at death.
4. Estate Administration Tax (Probate Fees) in Ontario:
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? Estimated: $85,750.
Total Estimated Taxes and Fees:
$425,150 + $300,000 + $85,750 = $810,900
And that’s just the taxes. Additional costs like accounting and legal fees will also reduce your estate before your beneficiaries receive anything.
What You Can Do to Protect Your Legacy
If you want to leave your children a tax-free inheritance at a fraction of the cost of these estate fees, let’s sit down and discuss.
How Permanent Life Insurance Can Help:
? Liquidity for Taxes: Life insurance proceeds are paid directly to beneficiaries, tax-free, ensuring your heirs don’t need to sell assets to cover taxes.
? Cash Value Options: Some permanent policies build cash value, offering flexibility and potential growth.
? Cost-Effective Solution: Compared to losing 30-50% of your estate to taxes, the cost of insurance is minimal.
Let’s Discuss Your Plan
Protect your family, safeguard your assets, and secure your legacy.
Asaf Halperin
Expert Insurance Agent
647.627.2480