加拿大有遺產稅嗎? 遺產規劃如何避免遺產費用減少遺產稅 如何將資產轉移給孩子 加拿大遺產傳承策劃 Avoid Probate and Reduce Estate Taxes【Novella我想退休】

Welcome back to Novella Wealth's channel Hi I'm Kinson I'm Cynthia We received a comment on our previous video Asking about if there are estate taxes in Canada And if one has to pay capital gain taxes at death Is there a better way to leave your legacy to your children? So in this series of "Let's Retire" For this video, we will talk about how to plan your estate and pass it to the next generation in an efficient way Before we begin, remember to subscribe to our channel, like, share and comment on this video. Okay let's get right into it First thing to establish is this: there is no estate or "inheritance" tax in Canada so to speak However, the bad news is that Taxes on income and capital gains must be paid when someone dies Many people have the misconception that these income and capital gain taxes are "estate taxes" These are actually the taxes owed on one's 'Final Tax Return' Which is literally the tax return you file after one passes away So some people may refer to these taxes as estate tax In this video, we will collectively refer to these fees and taxes as "estate taxes" Just so to make it easier for people to understand But we will explain further what assets are taxable after death Or our next generation will be responsible to pay the tax For legacy or estate planning Is simply having a last will enough? I don't think so It is better to have a will in place than not to have one In British Columbia Let's say you have one million in assets If you die intestate (without a will) the law in BC says how your estate will be divided If the deceased leaves a spouse and no descendants The entire estate goes to their spouse If the deceased leaves a spouse and descendants And there is no will The spouse gets the first $300,000 of the estate Half of the remaining $700,000 will be given to the spouse (so $350,000) The other half ($350,000) is divided equally among the children Let's say you don't have a will And there is no one to inherit your assets (no one qualifies under the rules as your next of kin) Your estate may go to the provincial government Every province and territory in Canada has their own separate estate laws You can refer to the links in the description box below this video for more information But even with a will in place Is it true that your assets will be passed down to the next generation exactly as you'd wish? It is not necessarily the case Because if someone challenges your will There is a chance that the estate will be frozen And not passed onto the next generation as per your wishes But there is a workaround to this problem That is, consider buying life insurances as an asset to pass on It's guaranteed to payout your money to the beneficiary When you pass away, the insurance policy will transfer the assets to the beneficiary (tax-free!) And there is no need to go through the process of probating a will Therefore no one can contest to it Estate taxes include probate fees and capital gains tax These are often referred to as estate taxes What is the difference between these? Simply put, if your assets are distributed through your estate You need to pay probate fees The probate fee in British Columbia is on average around 1.4 percent Assuming you have an estate of $1 million Your probate fee will be around $14,000 Each province has different probate fee charges If you would like to know more You can refer to the links in the description box below To find out how much probate fee is for different provinces Another fee you need to pay when you pass away is the capital gains tax Many Chinese have a preference for purchasing investment properties for rental income Let's say an investment property was purchased for $700,000 And at the time of death, the value of the property appreciated to $1 million Therefore the capital gained is $300,000 Half of the $300,000 That is, $150,000 is subject to tax in the final tax return And the balance is to be passed on to the next generation through estate or will Then it is subject to further probate fees Many people may wonder Is it true that the descendants will pay these taxes and fees for us? Actually, no. The final taxes owed and probate fees are deducted before the assets can be passed on to the descendants Is there a way to avoid probate fees and minimize capital gains taxes? First of all, under the current estate law, there's no capital gains tax on principal residence So if own a home and it was your principal residence When you pass this property to someone else when you pass away No capital gains tax will be charged Take British Columbia for example Assuming Cynthia and I are spouses Usually our principal residence is joint tenancy Each person has 50% ownership If I were to pass away today My 50% share will be transferred to you directly No will necessary There are no capital gains tax nor probate fees Now that you own 100% of this property When you also pass away, and this property is then pass on to our children There is no capital gains tax either Because it is your principal residence However, there will be probate fees incurred Because it has to go through estate probate process But can I also avoid this probate fee? Sure there is a way You can give 50% ownership to your children on the deed Then when you pass away Your 50% of ownership will transfer to your children Then you don't have to probate fees either Most often our assets may not be real estate only We would also have other investments In various registered accounts Such as RRSP, TFSA, RRIF, etc. Where you can assign a beneficiary when opening these registered accounts The advantage is that on death Your registered accounts pass to your designated beneficiaries directly outside of your estate and not subject to probate fees But we may also have money in unregistered accounts such as cash and savings accounts Cash in these account is considered part of your taxable estate and must pass through probate subject to fees Someone may ask how they can effectively avoid the probate fees on cash accounts? One of the methods is You can utilize insurance products that has a beneficiary You can purchase a life insurance, name a beneficiary, which therefore will bypass probate Perhaps you may feel that in the end, we keep saying to buy insurance products As a matter of fact, you should think of insurance products as tools For your estate planning It is actually a very effective and efficient one at that Kinson, why don't we illustrate further with a case study Suppose a single mother has 2 children She dies at the age of 80 Has 2 properties One principal residence and one rental property Plus $500,000 in a cash or GIC account and another $200,000 invested in RRIF retirement account And one life insurance policy How would you help this family plan their estate? Based on this simple example of yours We will first calculate the final income tax owed and probate fees amount Let's say after calculation The total fees and taxes are $700,000 Meaning that $700,000 will have to be paid no matter what, there is no way to avoid it It's just a matter of how to pay the $700,000 Put it simply, I would recommend buying a $700,000 life insurance policy Because it doesn't actually cost $700,000 to buy a $700,000 life insurance policy The money saved can be enjoyed when you retire In your example The client also has $200,000 in her RRIF account Are there any taxes applicable here? Assuming one of the children is named as beneficiary of the RRIF account then there is no probate fee But the $200,000 will counted as income in her final tax return If you make $200,000 in a year Accounting other assets and income together, maybe $100,000 will be needed to pay taxes In this case scenario, the client also has $500,000 cash in bank accounts Some bank's unregistered accounts do not have designated beneficiary Therefore may need to pass through probate This probate process may take six months or even up to a year to be completed I would recommend that she transfers the money into an insurance product while she's still alive such as a term deposit or a segregated fund policy The advantage of insurance products is that they have designated beneficiaries If the beneficiary is an individual then it's not subject to probate Generally speaking, after the insurance company receives the death certificate The money will be paid out directly to the beneficiary within about 7 days So that is how one would go about planning an estate We just explained how to use insurance as a tool for estate planning But is insurance suitable for everyone? Of course not necessarily So if you want to know if this method is right for your situation It's best to talk with us first and have us analyze your situation You are welcomed to make an appointment for a 1-on-1 free consultation There's not enough time to cover all aspects in estate planning today So if you have any questions Leave a comment below We will try to answer your questions in our next videos Hit that like button if this video has helped you. Comment, share and subscribe to our channel! Bye bye!

Channel: Novella Wealth加拿大理財生活

Views: 16,901

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Id: 5uJYI8e1XpM

Length: 10min 51sec (651 seconds)

Published: Tue Aug 09 2022