At Greenfeld Financial, our team works closely with you to ensure your retirement future is secure.
We can assist you with:

  • When to convert an RRSP to a Retirement Income Fund (RIF)    

  • When to take OAP & CPP              
  • Group Pension Planning

  • Portfolio adjustments for income generation             

Estate planning is just as important. Specifically, estate planning allows you to decide exactly who will benefit from their estate, and to what extent. Estate planning also ensures that the estate will not be destroyed by taxes imposed on the transfer of assets at death. After your retirement plans are organized, we can help you review the following estate planning items:

  • Ensuring your will is up to date and reflects your end of life wishes

  • Naming your Executor

  • Cabin/cottage beneficiary issues

  • Trusts


The Family Cottage

While selling a cottage to a stranger or third party is fairly straightforward, handing down your property to family members raises some crucial issues. It may be important for you to pass on the cottage to continue a family connection, but you should carefully consider your plans so that you avoid future complications. There will be tax issues, certainly, but typically more far-reaching and significant are the emotional and personal implications for your family. There are many true stories of families where disputes and misunderstandings about the future of the family cottage have caused permanent rifts between family members. Planning ahead is extremely important and, ideally, all of the interested parties should be brought into the discussion upfront so that you can reach some sort of consensus together.

Transferring A Cottage To Your Spouse

Transferring a cottage to your spouse through your estate is usually only a temporary solution since it doesn’t resolve the issue of who will get the cottage in the next generation—but it can certainly be done. Under tax law, when one spouse transfers property to other spouse, there are no immediate tax consequences. This is also the case where the cottage is jointly owned. For example:

Toni and Michael Gomes purchased a cottage jointly in 1976 for $50,000 ($25,000 each). In their Wills they specify that all assets should flow to the other upon the first death. In 2011 Michael dies at the age of 78 and his assets, including the share of the cottage, flow to Toni, who is 74 at the time. At the time of Michael’s death, the cottage was appraised at $300,000. Toni now owns the cottage with an Adjusted Cost Base (ACB) of $50,000 and a Fair Market Value (FMV) of $300,000. While there are no immediate income tax implications due to the spousal rollover, Toni would now need to consider what would become of the cottage upon her death.

Transferring a Cottage To Your Children or Child

If there is no surviving spouse, then assets, including a cottage, are considered to be sold at their FMV at the time of death. In most cases, this results in a taxable capital gain to the deceased’s estate. The beneficiaries receive the property at the FMV and that is their ACB for future reference. Who the beneficiary or beneficiaries are is determined through the Will. We will consider the tax and then the personal/family implications by expanding on the case of Toni and Michael Gomes introduced above.


Toni Gomes, a widow, dies at age 80

She has two surviving children:

  • Agatha, age 50 – Agatha has two children: Irene, age 25, and Paulo, age 23

  • Peter, age 52 – Peter is a lifelong bachelor with no children

Toni has left her cottage to Agatha and Peter jointly through her Will.

At the time of her death, the cottage is valued at $400,000 with an Adjusted Cost Base (ACB) of $50,000.

The Implications for Toni’s Estate

For tax purposes the cottage is considered to be sold at its FMV of $400,000. With an ACB of $50,000, this triggers a capital gain of $350,000 ($400,000 – $50,000), and a taxable capital gain of $175,000 ($350,000 x 50%). Assuming a marginal tax rate of 45%, the Executor of Toni’s estate will be responsible for a tax bill of approximately $78,750 ($175,000 X 45%). The Executor would legally be unable to distribute any estate assets until this tax is paid. This could be a challenge if the estate does not have sufficient cash to pay the tax, which might force the inheritors to have to sell some assets.

Planning Point – It is important to plan ahead to deal to avoid a situation where your beneficiaries have to sell estate assets to pay for taxes. One obvious solution would be for Toni to have taken out some sort of permanent life insurance with her estate as the beneficiary. This would have provided a death benefit sufficient to pay the estate taxes. For example, if she had taken out a policy on her own life when she was 50, or even 60, for $100,000, the death benefit could have been used to cover the tax bill on the estate transfer.

The Implications for the Beneficiaries

After Toni’s estate is wound up, both Agatha and Peter have a 50% interest in the cottage. For tax purposes, they both have an ACB of $200,000 ($400,000/2).

Reducing The Tax Burden On Your Beneficiaries

There are ways to reduce or eliminate the tax burden on your beneficiaries when passing down the cottage. One valuable and flexible solution is to transfer the cottage into a trust, either when you are still alive or after you pass. 

Transfer of Assets Upon Death

If your spouse passes away his or her assets will need to be distributed to you and any other beneficiaries. Different rules apply to different types of assets.

Registered Retirement Savings Plans

If your spouse held RRSPs, a Refund of Premiums representing the value of the investments in the RRSP can be transferred to you on a tax sheltered basis. You can choose to:

  • transfer the funds to an RRSP

  • transfer the funds to a RRIF

  • transfer the funds to a registered annuity with an insurance company


If your spouse had an annuity when he/she died that was a term annuity and you were named as the successor annuitant, you will begin to receive the remaining payments.

Registered Retirement Income Funds

If your spouse had money in a RRIF, the value of the remaining amount in the RRIF can be paid to you as a Designated Benefit. The funds can be received tax sheltered by either:

  • Transferring the funds to another tax-sheltered plan such as a RRIF or an RRSP (if you are 71 or younger)

  • Taking over the RRIF assets. You will then start receiving the payments and be responsible for paying tax on the yearly withdrawals

  • Using the funds to purchase an annuity

Deferred Profit Sharing Plan (DPSP)

As with other registered plans, if your spouse had a DPSP when he/she died the proceeds of the plan can be transferred on a tax free basis into one of the following in your name:

  • RRSP

  • RRIF

  • Registered Pension Plan (if the plan permits)

Non-Registered Assets

If your spouse held non-registered assets at death there will probably be opportunities to transfer or ‘rollover’ those assets to you without immediate tax implications.

Under the spousal rollover rules all assets can be transferred to you without immediate tax consequences.

Real Estate

If your property is registered in joint tenancy with right of survivorship (meaning both spouses are equal owners) on the death of your spouse, you automatically assume full ownership of the property. This will reduce probate fees.

Your financial advisor can provide you with more information about the implications of transferring your spouse’s assets.

Non-Spouse Death

If the person who passes away isn’t a spouse, taxation rules are handled differently. As described above, there are special tax rules that allow for the tax-free transfer of assets to a surviving spouse. Different rules apply where the deceased does not have a surviving spouse. Under tax law, death will result in a deemed disposition of all assets at Fair Market Value and they will be tax payable unless there is a surviving spouse and in a more limited sense, where there are surviving minor children or adult children with a disability.

Taxes On Death

The proceeds of a person’s estate cannot be distributed to beneficiaries until all estate debts have been paid and tax is usually the largest debt. This can present difficulties if there is not enough cash in the estate to satisfy the tax bill which may mean selling estate assets. Where there are non-registered assets such as real estate there may be capital gains that arise and where there are registered assets such as RRSPs or RRIFs, the full market values will be taxed. Consequently, the beneficiaries may not receive what the deceased intended. In the case of a family home, the Principal Residence Exemption will often serve to protect any of the gains from tax.


Probate fees are the provincial/territorial death taxes levied on the value of a deceased’s estate. Although taxes cannot be avoided, there are ways to avoid or reduce probate fees by having assets pass outside the estate such as having a named beneficiary on registered funds such as RRSPs and life insurance. Having assets registered in Joint Tenancy will also result in assets passing outside the estate.

Tax & Estate Planning

Now that you are about to begin your retirement your main concern is probably that you will have enough funds to enjoy what is hopefully a lengthy retirement. However, this is also the time to take a look at your plans for handing down your assets when you pass away. The primary concern when planning your wealth transfer is your Will. If you do not have a Will in place when you die you are said to have died ‘intestate’. This will result in several problems. First, you will not have a representative and the provincial court will have to appoint one. This will take time. Second, and more importantly, any assets you owned at death will then be distributed to family members according to a provincial formula and it may result in your assets being distributed in a way that you did not intend.

Here is a link to a basic Will: Last Will and Testament

Although there is no legal requirement to do so, it is a good idea to use a lawyer or notary to draw up your Will. Our office can certainly provide you with some guidance as well, particularly in regard to financial assets.

When you complete a Will you will need to name an Executor (or Executrix if a woman). This is a very important decision as the Executor is responsible for distributing your assets according to your Will. Being an Executor can be very time consuming and complicated so you should ensure that the person has the ability to complete the task. Here is a will planning checklist to assist you.

Can You Pass Down your Assets Now?

You don’t have to wait until you die to pass down your assets. However, several issues may arise. First, you will lose control of those assets. Second, there can be adverse tax consequences since for tax purposes you are deemed to have sold an asset if you give it away and a taxable capital gain may result.

One method that can deal with the control issue is to establish a trust where the assets are held in the trust on behalf of the beneficiary. The Trustee (which can be you) controls the assets. Trusts are very useful and should be established with the assistance of a lawyer.

If you own your own business corporation there are special rules that allow you to effectively pass it on to your children while you are alive while maintaining control of the company and minimizing tax. However, this can be a rather complex strategy and you should only undertake this with guidance from a qualified tax professional.

Tax Issues

In retirement your tax situation is going to change. Your sources of income will be different and assuming you are older than 65, other tax factors will come into play, primarily in the form of tax credits. As a retired senior you may be eligible for the age credit, pension credit, medical expense credit, and spousal credit to name a few. Your advisor can help you structure your retirement income plan to minimize any negative impact on these benefits. When the time comes to do your tax return, ensure you are dealing with someone knowledgeable in seniors’ issues to ensure that you are taking advantage of all the tax breaks possible.

You have probably heard the old saying that the only inevitable things in life are death and taxes. This is true to a great extent and there will be tax consequences on your death that you need to be aware of and plan for.

When you die, it is assumed for tax purposes that you are immediately selling all of your assets for fair market value. This can result in a very large tax bill to your estate. However, one of the most beneficial tax tools available to individuals is the spousal rollover. If you have a spouse (which includes common-law and same-sex spouses) when you die, you or your representative can choose to ‘rollover’ your assets to your spouse. By doing this you will effectively defer any tax until your spouse dies when he/she may encounter some tax complications. Speak to our office about the use of the spousal rollover and about the special rules around your home and how taxes are impacted by the Principal Residence Exemption.

If you do not have a spouse and are anticipating taxes at death, a method to deal with the taxes is to take out insurance on your own life with your estate as the beneficiary. This will ensure that on death, your representative will have enough money to pay the tax bill. In the absence of the insurance proceeds, your representative may be forced to sell estate assets to pay the taxes.

A qualified insurance professional can assist you in selecting the right insurance in the correct amount.

Making charitable bequests is a generous way to help worthy causes and help your tax situation. Charitable donations result in tax credits which reduce your taxes and if you make a charitable request on death it will reduce your final amount of tax payable.


©2019 Greenfeld Financial Management

Suite 205, 4841 Delta Street
Delta, BC Canada V4K 2T9

Tel: 604.940.8617
Fax: 604.940.8561

  • Black LinkedIn Icon
  • Facebook
  • Twitter