For wealthy families in Canada, effective estate planning is essential for preserving wealth and minimizing tax liabilities. While Canada does not impose an inheritance tax, the Canada Revenue Agency (CRA) considers assets to be disposed of at fair market value upon death, triggering capital gains tax. Key assets affected include real estate (excluding principal residences), non-registered investments, and business shares.

Key Strategies

1. Spousal Rollovers
Assets transferred to a spouse or common-law partner upon death are not taxed immediately, deferring taxation until the spouse disposes of the assets or passes away.

2. Establishing Trusts
Trusts such as Alter Ego Trusts, Testamentary Trusts, and Family Trusts offer tax advantages, greater control over wealth distribution, and opportunities for income splitting.

3. Life Insurance
Permanent life insurance policies, including whole life and universal life insurance, provide tax-free payouts to beneficiaries, ensuring liquidity to cover estate taxes and preserve business assets.

4. Gifting Assets
Transferring assets during your lifetime, such as through charitable donations and business share transfers, can help reduce the taxable estate and minimize future tax liabilities.

5. Regular Reviews and Updates
Estate plans should be reviewed regularly to ensure they align with evolving tax regulations and financial goals.

Final Thoughts

For wealthy families in Canada, tax-efficient estate planning is key to protecting their legacy. By leveraging spousal rollovers, trusts, life insurance, and gifting strategies, families can reduce tax liabilities and secure their wealth for future generations.

Looking for more information about estate planning?
MacMillan Estate Planning | Contact us today to explore personalized estate planning strategies and get answers to your questions.