Penning your financial legacy

Your financial legacy rests within your will. Due diligence and proper planning now will benefit your loved ones for generations to come. This blog provides some practical considerations for estate planning.

We often hear that the only certainties in life are death and taxes; I would add love and fear. If you are lucky enough to have truly lived, you lived the life you chose for yourself. Leaving your legacy is the final chapter in the book of your life, so why not plan for it?

In between the uncomfortable discussions we need to have about death and the overall financial and legal complexities, there is ample room for uninformed assumptions. As such, proper estate planning is often overlooked. Even the most ambitious of DIY planners is well-advised to seek professional advice; these are waters that ought not to be navigated solo.

Some considerations:

Eliminate surprises

Many family feuds have been rooted in the family estate. We've all heard about Michael Jackson's estate drama, and it serves as a reminder of the types of rifts estates can create. Documenting what to distribute, and how to do so, will help your designated representatives execute your plan as you had wished.

Introduce your advisors in your will

Your family or personal representatives may not know the professionals who know the history behind your estate plan, and your assets. Key players to introduce are your lawyer, accountant and financial planner.

Gain agreement on unequal divisions

You may have decided that one child should receive less of your estate because they have already received money from you (perhaps for a house or car or to start a business). Having an open discussion on why assets may be unequally distributed at death may prevent some resentment.

Tax erosion

What you envision to be the outcome for your beneficiaries may not be the reality, once your final tax bill hits. Different assets will generate different tax consequences. For example, registered savings are taxed differently than non-registered savings.


It may come as a surprise to beneficiaries that 100 per cent of the investment fair market value is included on the deceased’s terminal tax return as income and taxed at the deceased’s marginal tax rate. For many, this could mean 53.53 per cent. Yikes! The 53.53 per cent taxation rate would be based on the 33 per cent top marginal tax rate plus the 13.16 per cent top Ontario provincial tax. Income in excess of both the top federal cut-off amount of $202,800 and the provincial cut-off of $220,000, will be subject to taxes of 50.53%. (Source: Canada Revenue Agency, 2017.)

Non-registered savings

As a general rule, a taxpayer is deemed to have disposed of all his or her assets before death, with the difference between fair market value and adjusted cost being a capital gain, half of which is taxable to the deceased’s estate and must be reported in the deceased’s final tax return.

So which generation will foot the bill? That’s the hot potato.

Deferral strategies may be utilized if the deceased has a spouse, where assets can be transferred at cost. Taxes will be due upon the death of the second spouse. In this case, consider the ability of the beneficiaries’ estate to fund this. Permanent insurance is a viable option for many, although care must be exercised in the insurance needs analysis, in order to ensure proper coverage.

Own it

Write your story’s ending for your loved ones, and avoid turning it from an adventure, drama or love story into a disturbing psychological thriller.

Keep the conversation going

Does your plan balance these considerations?  Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.  This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Maricel Ramos is solely responsible for its content. For more information on this topic or any other financial matter, please contact an Investors Group Consultant.

About the Author

Maricel Ramos

Maricel Ramos , CPA, CGA, CFP, RRC, is a financial consultant with Investors Group Financial Services in Toronto.