In Canada, a trust is a legal arrangement where one person (the trustee) manages assets on behalf of someone else (the beneficiary). The person who sets up the trust is called the settlor. When structured and maintained properly, a trust may help reduce exposure to risks such as divorce, family disputes, legal claims, and creditors.
How much tax will my estate or beneficiaries pay on my RRSP when I die?
Your RRSP value is fully taxable in the year of death unless transferred to a spouse or dependent. For large RRSPs, this can push total income into the highest tax bracket, instantly wiping out nearly half the account value.
When you pass away, your RRSP is treated as if you cashed it out the day before your death. This is called a deemed disposition. The full fair market value of your RRSP is added to your final income tax return, which can create a big tax bill.
If you’re searching how to avoid probate in Ontario, you’ve probably been told that you need to get a trust. But this isn’t the best option for every situation. In fact, trusts are just one of a few strategies that you can use to avoid probate.
A capital gain happens when you sell or are deemed to have sold a property or investment for more than you paid for it.
Does a spouse automatically inherit everything in Ontario? In Ontario, a spouse does not automatically inherit everything if their partner dies without a will.
How much is estate tax in Ontario? It’s important to know that while there is no estate tax in Ontario, there are probate fees and capital gains taxes upon death. This can add up to a significant tax hit when someone dies.
If you’re a business owner or own multiple properties, there are additional considerations that could significantly impact how much tax your estate pays and how efficiently your assets are transferred.
Living trusts can be a good idea if you want to avoid probate, keep financial matters private, and have assets managed effectively during incapacity.
While family trusts can be powerful estate planning tools, they do come with challenges. They can be expensive to set up and require ongoing legal and accounting support, which makes them less practical for smaller estates.
