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Tax Planning with MacMillan Estate Planners

Feb 20, 2018 9:30:00 AM The MacMillan Estate Planning Team Tax Planning, tax plans, tax changes


As everyone knows, tax season in the US and Canada is beginning. Our tax returns are due April 15th and April 30th respectively, so for affluent families with large, complicated estates and a diverse portfolio of assets and income, it’s time to start considering tax planning.

Tax Planning isn’t really something you should start just a few months before your tax return is due. Instead, it’s better if you can proactively have your personalized estate plan created with taxes in mind. While paying taxes is a civil obligation and an unavoidable reality, an expert can create a well-designed estate that utilizes numerous tools to significantly reduce or defer how much is owed.

Taxes Both at Home & Abroad. Internationally held assets, such as US property and investments, are liable to both Canadian estate taxes as well as the estate taxes in the country where the asset is held. It’s also important for an individual to consider whether they’re working at home or abroad or both and if that has any tax implementations. Of course, carefully considering your tax liability both in Canada and abroad isn’t just important during April.

When a person passes, their assets in separate countries are treated as separate estates, and the estate laws of the jurisdiction they dwelled in must be followed. Having to settle two or more estates simultaneously can add considerably time and money to the project, so it’s always better to appropriately craft your estate plan early and keep it updated as the years go by.

How Does Long Term Tax Planning Save You? We have the privilege of working with a lot of smart people, so it shouldn’t surprise you to hear that many of our clients choose to carefully divide their assets with their spouse to avoid being subject to higher tax rates. This makes a lot of sense. Canada’s lowest tax bracket, for those making less than $45,282 annually is 15%. The highest bracket for those making more than $200,000 annually is more than twice that amount at 33%. However, all this careful planning can go to waste when one of the spouses dies and the assets automatically pass onto the surviving spouse, effectively doubling their income and assets.

At MacMillan, we help clients solve these sorts of challenges with tools they may not have considered. In the above example, a good option would be having the deceased spouse’s assets automatically transfer into a spousal trust. A trust keeps the money and assets separate from the surviving spouse’s legal property, which prevents them from being bumped into a higher tax bracket. However, they’re still able to access the assets and benefit from the income. Finally, the surviving spouse can continue to benefit from income splitting.

With tax season just around the corner, it’s a good idea to review your estate plan. Is everything in order to prevent excessive taxation? Do you have all the information you need to complete your tax return on time? The experts at MacMillan Estate Planning are here to help you create a tax plan that serves the needs of your family now and in the future. Get started today with a free consultation.

At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.

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