TAX MAN IS ASKING QUESTIONS

Estate administration tax, commonly known as probate fees, is a percentage value of the estate. Proper planning and tax shelters ease the tax burden on your heirs.

I know that probate fees are payable by my Ontario estate on my death. How are probate fees calculated?
Although commonly called probate fees, the proper term for this tax is “estate administration tax”, based on a percentage of the value of the estate to be administered under a Certificate of Probate provided by the Ontario Court. The fees are equal to ½% on the first $50,000.00, and 1½% on any additional amounts.

Are there any income tax shelters in Ontario?
A popular approach to sheltering income from tax is the use of universal life insurance policies, which are excellent vehicles to allow investments to accumulate on a tax - free basis. However, the tax benefits of using universal life insurance policies require a long -term commitment from you to estate planning. These policies are often used successfully with family-owned businesses. A lawyer familiar with estate planning will seek directions from your insurance representative, accountant, and investment advisor in order to minimize any legal issues in the most tax efficient manner, and allocate your estate appropriately amongst your beneficiaries.If you wish a recommendation for any such expertise, please communicate with me

My company has accumulated considerable assets. How do I leave these assets to my family and keep tax obligations to a minimum?
There are several approaches to carrying out a plan that will meet your needs, which must be carefully discussed with your accountant and lawyer, who will be seek the approach that will provide little or no tax consequences associated with the changes in the corporate structure.

A substantial investment in a business that continues to grow is often transferred to children who benefit from the future growth rather than the parents. This approach is called a “freezing” of their current assets. Careful planning is required.

Another potential tax saving benefit is available to each Canadian resident individual, subject to certain conditions, to receive capital gains tax free if they arise on the sale of shares of a Canadian private corporation carrying on an active business in Canada.

The tax applicable to low income earners are significantly lower compared to the high earners. Accordingly, significant income tax advantages are available to persons setting up family trusts to own shares in a corporation and distributing those dividends among family members thereby reducing the tax obligations.

How do I avoid paying probate fees?
There are several approaches to carrying out a plan that will meet your needs, which must be carefully discussed with your accountant and lawyer, who will be seek the approach that will provide little or no tax consequences associated with the changes in the corporate structure.

To avoid probate fees [estate administration tax] the use of multiple wills has arisen in Ontario. One will deals with those assets requiring probate administration such as saving deposits and investments in banks and trust companies. Another will would specifically deal with shares in a privately owned corporation that does not require probate administration.

The most common avoidance scheme is the use of joint tenancy deeds in the transfer of real estate usually on the death of a spouse. However, this approach is not beneficial for everyone, and a careful review by on Ontario lawyer of the size of your estate and that of your spouse is necessary.

Life insurance proceeds and registered retirement savings payable to a designated beneficiary are excluded from an estate and effective tax shelters. Probate fees are not payable on these amounts.