I provide estate planning services to business owners, individuals, and families across Ontario. Tax and estate planning requires attention to how assets will be treated at death, how income can be split among beneficiaries, and how to structure Wills and trusts so the tax burden on the estate and the surviving family is kept as low as the law allows. I work directly with executors, lawyers, and financial advisors to make sure the plan holds together and the CRA filings are completed properly and on time.
At death, the CRA treats most capital property as having been disposed of at fair market value. That deemed disposition can trigger significant capital gains on the terminal tax return. Similar rules apply to RRSPs and Registered Retirement Income Funds. Without proper planning, the tax bill on the terminal return can consume a large portion of the estate before anything reaches the beneficiaries.
The good news is that many of these consequences can be reduced or deferred through proper estate planning and taxation strategies. Spousal rollovers, testamentary trusts, dual Wills, post-mortem restructuring, and the timing of elections all play a role. The key is having these structures in place before they are needed, not after death when the options narrow considerably.
Wills should be reviewed every five years to make sure they are consistent with current tax legislation. Proper Will planning can reduce the estate administration tax that the province charges when an estate goes through probate. In Ontario, the first $50,000 of estate value is exempt from this tax. Above that threshold, the rate is 1.5% of the remaining value. On a large estate, the amount adds up quickly.
One of the most effective tools for reducing this cost is a dual Will structure: a primary Will covering assets that require probate (bank accounts, real property) and a secondary Will covering assets that do not (personal property, shares of a Canadian-controlled private corporation). Many business owners have only one Will and are not aware that a secondary Will could save their estate the 1.5% estate administration tax that applies to asset values above $50,000.
I advise on the tax implications of Will structure and coordinate with your lawyer to make sure the legal documents and the tax plan are aligned.
A testamentary trust created by a Will can be an effective way to split investment income among beneficiaries after death. The trust is a separate taxpayer. Where the estate qualifies as a graduated rate estate (GRE) for the first 36 months after death, the income earned inside the estate is taxed at graduated rates rather than the top marginal rate. After the 36-month period, the top flat rate applies.
Spousal testamentary trusts receive property at the deceased’s adjusted cost base, deferring the capital gain until the surviving spouse dies or the trust disposes of the property. Non-spousal testamentary trusts can also be used for income splitting with other family members.
A testamentary trust can only be created by Will. If circumstances change and the trust is no longer beneficial, it can generally be wound up with assets distributed to resident beneficiaries without tax to the trust.
I handle the tax planning, coordinate with your lawyer on the trust provisions in the Will, and prepare the T3 filings once the trust is in place.
When an estate holds shares of an investment company or an active business corporation, post-mortem planning procedures may allow for the tax-free extraction of corporate surplus. The two main strategies are the pipeline transaction and the bump transaction. A pipeline involves transferring shares from the estate to a new holding corporation, while a bump allows an increase in the tax cost of underlying capital property (land, portfolio investments) up to fair market value at the time of death.
Each situation is different, and a detailed analysis is needed to determine which strategy produces the best result. I prepare that analysis and coordinate the implementation with your lawyer and the estate trustee.
Terminal tax returns are due April 30th of the year following death for deaths occurring between January 1 and October 31. For deaths in November or December, the due date is six months after the date of death. If the deceased operated a business, the filing deadline extends to June 15th (with the same six-month rule for November/December deaths). Tax owing is still due by April 30th or six months after death, regardless of the extended filing deadline.
Unpaid bonuses, dividends, or social security benefits at the time of death may be reported on a separate rights or things return. This return is taxed independently of the terminal return, at graduated rates, which can produce a meaningful tax savings. Rights or things returns must be filed by the later of one year from the date of death or 90 days after receiving the notice of assessment for the terminal return.
I deal directly with executors and lawyers to make sure all deadlines are met and all available returns are filed.
For living estate planning (Will structuring, trust planning, estate freezes), the engagement starts with a review of your current corporate structure, personal assets, and existing Will. I identify the tax issues, outline the planning opportunities, and prepare a detailed recommendation for you and your lawyer.
For post-mortem work (terminal returns, rights or things returns, trust filings, pipeline or bump transactions), the engagement starts as soon as the executor or lawyer contacts me. Time-sensitive deadlines apply, so early involvement matters. I take ownership of the tax compliance and planning, coordinate with all parties, and deliver the filings and instruction letters on schedule.
I provide a fee estimate after the initial review of the file.
A dual Will structure separates assets that require probate from those that do not. The secondary Will covers assets like CCPC shares and personal property, which are distributed without probate. This avoids the 1.5% Ontario estate administration tax on those assets above the $50,000 exemption threshold.