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Estate Planning In Canada: Some Basic Considerations
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Canada is a country which does not charges any taxes under the name of the estate tax. This is true but the taxes for the state fall under the category of the deemed deposition tax. The deemed disposition tax includes the taxes which are similar to the estate taxes and are applicable when a person is dead.
Thus while having the estate planning for yourself in Canada you must be aware of certain small things which includes the issues related to the taxation policies. The deemed deposition tax is names as it is deemed at the time of the disposition of the person i.e. the death. The capital gains that are made by the sale also includes the retirement accounts and the income which is received from the stocks, real estate investments, treaties, bonds and other plans such as the life insurance which proceeds in the death year for any person which starts from the first day of January and continues up to any month. The final tax returns also include the tax gains which are filled in the year of death. The final taxation under the real estate is substantial and consists of the tax rates up to 29 percent. This also includes the provincial and the probate tax.
A good thing about the disposition tax is that it is also transferable under the surviving spouse. The taxes are also deferred even if the assets are transferred to the surviving partner. The taxes are also deferred in case the spouse sells the assets and the tax is applied. When the person also dies and the assets are passed on to their successors, the half of the capital gains which are earned from the stocks, bonds and other real estate investments.
A better option is to make a will before the death. This is beneficial because if you make the will the successors would get the real estate property according to the person’s choice. In the otherwise situation the Canadian province has the right to decide the distribution of the same without the wish. According to the laws which are followed by the policies, the amount in cash or the property up to first $50000 is deposited to the surviving partner and the rest are distributed among the spouse and the children.
If there is no spouse or the child then the parents enjoys the amount, which is followed by the brothers and sisters.
If the person dies without the payment of the will then it would also lead to the delays and the payment of the extra expenses.
These considerations are also applicable in case of an offshore trust which is the offshore trust involving the offshore jurisdiction. Now it is very important to have the offshore trust in order to consider the trustee for any kind of real estate. This is because it is of prime importance to have a trustee during the real estate buying and selling. The settling or the transferring of the policies is also managed under the offshore trusts.
Ken Donaldson is a chartered accountant who practices as an independent tax consultant. He also author of estate planning, in this article he provides offshore trust tips. For more information you can visit Taxca.com.
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