Did you know that a significant risk to Canadian estate wealth lies in the application of deemed disposition by the Canada Revenue Agency (CRA)?
In an estate planning context, deemed disposition is the assumption (for tax purposes) that the deceased has disposed all of their capital property just before death, thereby crystalizing taxable capital gains on appreciated assets, as well as including the full value of the deceased’s RRSP or RRIF assets in their taxable income on their terminal return (if spousal rollover is not elected or is not applicable).
The application of such deemed disposition upon your passing, subject to how you have structured your wealth at the time of your passing, may significantly erode your estate wealth. In extreme cases, your executor may be forced to liquidate assets to settle the resulting tax liabilities.
In this article, we describe two insurance solutions which may help you cover the tax which would otherwise be payable by your estate.