May 11, 2020

If you wish to preserve your estate for the full benefit of your heirs, then proper financial planning is an essential consideration. An unfortunate reality that you will need to consider is that, upon your death, the government may become a significant beneficiary of your estate through taxes. In the absence of a properly implemented estate plan, a significant tax bill may have a pronounced effect on the eventual settlement of your estate.

When an individual dies, most assets can be transferred to a surviving spouse, if any, without a tax liability. However, in the absence of a surviving spouse, a “deemed disposition” occurs for income tax purposes. This situation usually gives rise to taxable capital gains –often at the highest marginal tax bracket – and generates a tax liability for the estate.

An excellent example of this is what happens with a family cottage. Although you may wish to pass on the family cottage to your children, the reality is that the tax liability may force your estate and your beneficiaries into considering the sale of the cottage in order to pay the tax bill. The same can be said for other assets that you have which become taxable upon your death.  The following are general examples of some of the tax considerations which may apply to your estate upon death, when there is no surviving spouse.


  • Registered Savings (RRSP/RRIF)
  • Capital gains on non-registered investments
  • Capital gains on cottages
  • Capital gains on investment properties

Tax Exempt:

  • Proceeds from insurance policies to a named beneficiary
  • Capital gains on a principal residence

The Insurance Alternative

Let life insurance pay any costs related to death. Some of the benefits offered by Life Insurance:

  • Provides money to pay the final expenses, debts and tax liability
  • Proceeds at death are tax-free when directed to named beneficiaries
  • Insurance premium can be guaranteed without increase
  • Premium payments can be flexible depending on the product you choose

Life insurance is a simple coverage, that provides estate liquidity to cover the potential capital gains and related tax consequences, without the obligation for your heirs to liquidate cherished assets or to contract a substantial debt in order to pay estate expenses. If you are concerned about preserving the valuable assets passing to your heirs please call to see how we can help.