Estate

An estate is the net worth of an individual at any given point of time, whether alive or dead.

• Net worth defined as assets - liabilities.

Although an estate is deemed to be a trust, the tax rules that apply to an estate and to a

are significantly different, due to them being subjected to different tax rules.

2 areas where estate is most relevant:

• bankruptcy - a trustee is appointed to distribute your assets to creditors
• death - a trustee is appointed by you to distribute your assets to your heirs

Canadians don’t have to contend with an estate tax the way U.S. citizens do. However, what many people don’t realize is that a “deemed disposition tax” applies when you die.

• The deemed disposition tax is so named because your investments are deemed to be sold at death. Any capital gains triggered by their sale are included in a final income tax return filed in the year of your death.
• A final tax return also includes the value of any retirement accounts and income received from stocks, bonds, real estate investments, and even life insurance proceeds in the year of death

tax is deferred if the assets are transferred to a surviving spouse

• When the spouse dies, and the assets are passed on to other heirs, 50% of the capital gains of any stocks, bonds, real estate investments, and other assets are taxable at the personal income tax rate.