The objective of estate planning is to make the transition of one's estate as economic and as smooth as possible. While Alberta has no estate tax or inheritance tax, the cost of dying can become a terrible burden if not properly anticipated. Different ways of owning property can make it pass automatically on death, without even entering into the estate, or can require the necessity of an application for Probate, probate fees and legal fees. Advance planning for death can permit the orderly transfer of property with a minimum of expense and inconvenience. Careful evaluation of taxes and other considerations is important.
One of the biggest objectives in estate planning is to maximize the size of the estate and to reduce the taxes that may be required to be paid on death, namely, income tax and capital gains tax. An individual is deemed to have disposed of his capital assets upon death, triggering a potential taxable capital gain. If that capital gain is not planned, it could have devastating financial considerations requiring significant estate assets to be sold to pay the tax bill. Some exemptions, deferrals and rollovers may apply which could avoid or reduce the liability. Transferring all or some of this property during one's lifetime, using special tax rules can also be helpful.
If an individual has a will, their estate will pass according to that will to the parties named in the will. If an individual dies without a will, their estate passes according to legislation that may not suit the wishes of the deceased and may not serve their best interests.
Property that is held together with another party, either as "joint tenants" or "tenants in common" passes on death. Property held in joint tenancy (including certain joint accounts) passes automatically to the surviving joint tenant(s) without even entering into the estate of the deceased. Where possible, this makes a smooth and economic transition. Property held as a tenancy in common will pass with the estate of the deceased, either according to a will, if there is one, or according to legislation. This is usually more expensive and less convenient.
When considering one's estate planning, family obligations and the size and nature of the estate are the most important considerations. For more information contact Richard Davidson, Q.C., Edward Rice , Q.C., Cindee Nyrose or Roy Davidson.