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How to Structure Your Estate Planning to Make it More Tax Efficient

Wondering how you can best structure your estate planning to make it more tax efficient? Here's a few tips from our Chestermere accountant. 


Estate planning can be a touchy subject. Along with the morbid nature of the exercise, there can be a lot of unpleasant or difficult decisions to make. But it doesn't have to be that way. By taking a pragmatic approach and not letting your emotions enter into the picture, you can structure your estate planning to lower your overall tax burden upon your death and provide for those you love most. 
 

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How to Structure Your Estate Planning to Make it More Tax Efficient

There are quite a few things you can do to make your estate planning more tax efficient so your overall tax burden is lowered when you pass on. But before we get to any of that, you need to make sure you have the following in place: 

  • A will (along with a suitable executor and guardians should you have minor children)
  • Powers of attorney (for if you're incapacitated and can no longer make financial or medical decisions)

If you don't have a will and powers of attorney sorted out before you die or become incapacitated, your estate planning could go off the rails and not reflect your best wishes. When you die without a will, the government will get to decide how your estate is divvied up. And if you don't have powers of attorney assigned, the person making financial or medical decisions on your behalf may end up being someone you don't want making those decisions.
 

Don't Wait Until You Die to Give it Away

One of the easiest ways to structure your estate planning to make it more tax efficient is to give your money away as a gift to adult children or grandchildren while you're still alive. You just have to make sure that you're very clear about the nature of the gift and that there's no confusion among anyone about it being a gift and not a loan. You'll also want to ensure the person receiving the gift understands that it's either a portion of their inheritance, or in addition to it. By gifting your adult children or grandchildren cash before you die, you'll be lowering your tax burden as there are no taxes payable for either you or the recipient of the gift. But this only works with cash. If you gift any real estate or investment portfolios, the CRA will view it as a sale at fair market price and you will end up being responsible for any capital gains taxes.

In need of a small business accountant Chestermere? IAPC provides small businesses in the Chestermere area with bookkeeping, payroll, and tax preparation services all at affordable rates. To find out how we can help your business succeed, call us today to book your FREE consultation. 

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Till Death Do You Part

Another main way you can structure your estate planning to make it more tax efficient is by jointly holding property with your spouse. This will allow you to avoid having your house or other properties go through probate upon your passing, as the remaining share of the asset will simply be transferred to the surviving spouse. This is also the case for investment accounts that are held jointly. 

When it comes to lowering the amount of taxes your estate owes when you die, your spouse is once again a great avenue for doing so. If you name them as the beneficiary for your registered accounts (RRSPs, TFSAs) then you'll be able to reduce or defer the taxes on them at your death. If you leave your RRSPs to anyone else other than your spouse, then the full value of them is taxable once you die. 

One more way you can lower your taxes is by donating a stock portfolio of yours to charity. By donating these publicly traded securities, you won't have to claim any capital gains they may have gathered over the years and you'll also receive a credit for your charitable donation which can be used to lower the amount of taxes you owe. 

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Don't Wait

While the above methods are great for structuring your estate planning to make it more tax efficient, they won't do you any good if you haven't drafted a will and put the above strategies into place by putting them in writing. If you need any help with your estate planning, call IAPC and we can help put you in the best position to make sure your hard-earned money is cared for upon your passing and your loved ones are adequately taken care of.
 

IAPC Has You Covered

If you'd like to know more about our accounting services in Chestermere, book a free consultation with one of our trusted Chartered Professional Accountants today. 

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