Avoid the Tax Man

As Canada does not have specific death taxes or inheritance taxes levied against beneficiaries inheriting an estate, but have tax consequences against Non-registered assets as the taxpayer deemed to have disposed of all his property (stocks, bonds, mutual funds & real estate immediately before death at fair market value which might results in capital gain half of which is taxable to the deceased, to avoid this disposition is to transfer the property to the deceased spouse or partner without triggering tax liability. For Registered plans tax rules require fair market value of RRSP or RRIF at the date of death to be included on the deceased terminal tax return with tax payable at the marginal tax rate for the year of death, this huge inclusion can be deferred if RRSP or RRIF is left to a surviving spouse in such case the tax is payable by survivor at her or his marginal tax rate in the year funds are withdrawn from RRSP or RRIF.
If you are planning to leave investment assets to your heirs, then you can make withdrawals from RRIF to fund contributions to your TFSA as the contribution limit for TFSA is 10,000 annually as you are minimizing RRIF dollars subject to your high marginal tax rate in your year of death, when someone dies & leaves everything to a spouse, no hassle situation for your RRSP, RRIF simply roll over to your spouse or partner as CRA refund of premiums.To address your tax liability explore your life insurance policies, beneficiary designations, trust restructuring of assets ownership, see your tax lawyer for more help.  www.ecotax4u.com

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