Three Strategies to Maximize Your Estate Planning


Estate planning requires a delicate balancing of interests – you want to ensure that your loved ones are taken care of, but you also want to give to a cause that is meaningful to you. Thankfully, these do not have to be mutually exclusive and proper estate planning can make use of certain tax strategies to maximize the size of your estate for the benefit of everyone.

Benjamin Franklin said, “Nothing is certain except death and taxes.” It is also true that in death, there are taxes. Upon death, significant taxes may be payable by the estate thereby reducing ultimate gifts to family and friends. An easy way to reduce the amount of tax payable is by leaving a gift to charity under your Will. This way your estate will receive the benefit of generous provincial and federal tax credits that can be used to offset taxes owing by the estate.

At death, capital gains taxes are generally payable based on the increase in value of an asset from when it was initially acquired. When it comes to assets such as investment properties and publicly traded securities or mutual funds, the estate’s tax liability can be significant. Gifting publicly traded securities or units of a mutual fund directly to a charity will eliminate the capital gains taxes that would otherwise be payable on the deemed disposition of these assets.

Another effective method is giving a gift of life insurance. If you have an existing policy you no longer need, the policy may be assigned to a charity so that the charity ultimately receives the benefit of the policy and you will receive a tax receipt.

Consult an experienced lawyer and tax advisor so they can explain to you the tax consequences and benefits which may arise from a charitable gift to ensure the value of your legacy is maximized for all beneficiaries.