Does Ontario Have a Death Tax?

February 7, 2025

Written by Ron Cooke, President & Founder of Strategic Wealth Protection Partners in Ontario

Does Ontario Have a Death Tax?

Many people worry about a “death tax” when planning their estate, but in Ontario, there is no inheritance tax—your heirs won’t have to pay tax just for receiving an inheritance.

However, that doesn’t mean your estate is tax-free.

Upon death, capital gains tax, probate fees, and final income taxes can reduce what your family ultimately receives. Proper planning can help minimize these costs and protect your wealth for future generations.

Ontario Death Tax Basics

Ontario does not have a formal death tax or inheritance tax. Your beneficiaries do not have to pay tax just for inheriting your assets.

However, your estate may be subject to:

Capital Gains Tax: If your assets (real estate, investments) have increased in value, your estate may owe tax on 50% of the gains.
Estate Administration Tax (Probate Fees): Ontario charges probate fees based on the total value of your estate.
Final Income Taxes: RRSPs and RRIFs are fully taxable upon death unless transferred to a spouse or dependent child.

With the right planning, you can significantly reduce or even eliminate some of these costs.

How Are Your Assets Taxed Upon Death in Ontario?

When you pass away, the Canada Revenue Agency (CRA) treats your assets as if they were sold at fair market value on your date of death—this is called deemed disposition.

The main taxes your estate may owe include capital gains tax, estate administration tax (probate fees), and taxes on RRSPs and RRIFs. If you own property, investments, or a business, 50% of the capital gain is taxable. Ontario also charges probate fees of 1.5% on estates over $50,000.

Additionally, the full balance of RRSPs and RRIFs is added to your final income tax return unless transferred to a spouse or dependent child.

Without a plan, these taxes can significantly reduce what your heirs receive.

How Can You Reduce or Avoid Estate Taxes in Ontario?

A strategic estate plan can help minimize taxes and fees, ensuring more of your wealth stays with your loved ones.

Some proven strategies include:

Use the Principal Residence Exemption: Your home may be exempt from capital gains tax. (+)
Name Beneficiaries on RRSPs, RRIFs, and Life Insurance: This avoids probate fees and keeps assets out of your estate.
Use Joint Ownership with Right of Survivorship: Certain assets can transfer directly to heirs, bypassing probate.
Gift Assets During Your Lifetime: Gifting money or property before death can reduce estate value and probate fees.
Set Up a Trust: Trusts can help manage wealth transfer while reducing probate and capital gains tax.

With proper planning, you can protect your wealth and create a tax-efficient estate plan.

Can Trusts Help Lower Estate Taxes in Ontario?

Yes, trusts are a powerful tool for reducing estate taxes and ensuring a smooth transfer of wealth.

Avoid Probate Fees: Assets held in a trust are not part of your estate, meaning they bypass probate.
Reduce Capital Gains Tax: A trust can help spread out tax liabilities and reduce overall tax burdens.
Control Asset Distribution: You can set conditions for how and when your beneficiaries receive their inheritance.
Protect Against Creditors & Divorce: Trusts help shield family wealth from outside claims.

Trusts work best for real estate, family businesses, and high-net-worth estates. Setting one up requires careful legal and financial planning to maximize benefits.

How Can Life Insurance Be Used for Estate Planning in Ontario?

Life insurance is one of the best ways to cover estate taxes and ensure your heirs don’t have to sell assets just to pay tax bills.

A properly structured permanent life insurance policy can:

Provide a tax-free payout to cover capital gains tax and probate fees.
Ensure a smooth transfer of wealth without forcing heirs to sell properties or investments.
Equalize inheritances if one child receives real estate while another receives cash.
Fund a family business succession plan so heirs don’t have to take on debt.

Many families use life insurance as a cost-effective strategy to protect their estate and ensure a seamless, tax-efficient wealth transfer.

Who Should I Work With If I Need to Do Estate Planning in Ontario?

Estate planning can be complex, and working with the right professionals ensures your wealth is transferred efficiently and with minimal tax loss.

The best team includes:

An Estate Planning & Tax Specialist: Helps design strategies to reduce capital gains tax, probate fees, and estate costs.
A Lawyer: Drafts wills, trusts, and legal structures to ensure your estate plan is legally sound.
A Financial Advisor: Helps structure investments, life insurance, and retirement accounts for tax efficiency.
An Accountant: Ensures tax filings are optimized and estate strategies comply with CRA regulations.

With the right team of professionals, you can protect your assets, reduce taxes, and leave a lasting legacy for your family.

Final Thoughts

While Ontario does not have a formal death tax, the combination of capital gains tax, probate fees, and RRSP/RRIF taxation can take a huge bite out of your estate if you don’t plan ahead.

Trusts, gifting strategies, and joint ownership can minimize estate taxes.
Life insurance is a smart way to cover capital gains tax and protect assets.
A strong estate plan ensures your loved ones inherit more and avoid unnecessary legal fees.

Want to make sure your estate is structured properly? Let’s talk—a little planning today can save your family thousands tomorrow.

Discover How to Minimize Taxes and Secure Your Legacy

Did you know that without a solid estate plan, taxes and fees in Ontario could claim a significant portion of your wealth?

If you’ve worked hard to build your business, investments, and properties, protecting your legacy for your loved ones is critical. At Strategic Wealth Protection Partners, we specialize in helping high-net-worth individuals in Ontario secure their financial futures.

Our Living Estate Plan is designed to:

Reduce estate taxes and probate fees.
Simplify wealth transfer to your loved ones.
Reflect your values and priorities in every detail.

Your Legacy Matters

With our personalized guidance, we’ll help you navigate options like Living Trusts to protect your assets and ensure your family’s peace of mind. Contact us today to book your Living Estate Plan Consultation and take the first step toward a secure future.

Schedule a Living Estate Plan Consultation

Planning your legacy is about more than numbers—it’s about ensuring your family remembers you and your values are honoured for many years to come.

Estate planning and trusts can feel overwhelming, especially if it’s your first time. That’s why we’re here.

With our simple, 5-Step Living Estate Plan, we make the process easy, helping you create a comprehensive estate plan or trust that protects your assets from taxes and probate fees while preserving your legacy. Tools like The Final Word Journal capture your story, wishes, and essential details like accounts and end-of-life plans, ensuring your family has clarity and comfort.

Take the first step today—schedule a consultation call and give your family the ultimate gift: peace of mind and the assurance they were always your priority.

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If you’re starting your estate planning process, you may find these articles helpful:

About the Author

RON COOKE, PRESIDENT & FOUNDER OF STRATEGIC WEALTH PROTECTION PARTNERS

With over 30 years in financial services, I’ve seen the challenges families face when a loved one passes—lost assets, unnecessary taxes, and emotional stress. That’s why I created the Living Estate Plan, a comprehensive process to protect assets, eliminate estate and probate fees, and create legacies that are remembered for many years to come.

This plan ensures your family receives not just your wealth, but a meaningful reminder of your care and love. Tools like The Final Word Journal capture your story, wishes, and essential details, offering clarity and comfort during difficult times.

Your final gift should be more than money—it should be peace of mind, cherished memories, and an organized estate.

Speak with Ron