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Canada Estate Planning Guide

the estate planning in Canada. The will (the "last will and testament") is the legal document that determines the distribution of the assets after the death. The probate (the "estate administration" — the Ontario "Estate Administration Tax" at 0.5% on the first $50,000 and 1.5% on the estate value above $50,000) is the court process that validates the will. The deemed disposition — at the death of the taxpayer, all the capital property is deemed to have been sold at the fair market value (the "terminal return" — the capital gain or the loss is reported on the final T1 return). The spousal rollover — the assets that pass to the spouse (or the "spousal trust") are transferred tax-free at the cost base (the "deemed disposition is deferred" — the spouse inherits the tax basis of the deceased). The alter ego trust and the joint partner trust — the trusts that allow the "probate-free" transfer of the assets (the "trust planning" to avoid the probate fees). The registered plan rollover — the RRSP, the RRIF, and the TFSA can be transferred tax-free to the spouse (the "successor holder" for the TFSA, the "spousal rollover" for the RRSP and the RRIF). The LCGE — the lifetime capital gains exemption of $1,016,836 (2025) on the sale of the QSBC shares and the farm property. The estate freeze — the corporate reorganization to "freeze" the value of the shares for the succession planning. The life insurance — the death benefit is tax-free to the beneficiary (the "life insurance proceeds" — the "tax-free death benefit" — the "insurance planning" for the estate liquidity). The charitable donations at death — the "gifts by will" (the "testamentary gifts") are eligible for the 100% of the net income on the terminal return.

Will & Probate

• Will types: The "testamentary will" (the formal will signed in the presence of two witnesses), the "holograph will" (the handwritten will signed by the testator — valid in Ontario, BC, Alberta, Saskatchewan, Manitoba, Quebec, and the territories).
• Probate fees: The Ontario: 0.5% on the first $50,000 and 1.5% on the estate value above $50,000. The BC: 0.6% on the first $50,000 and 1.4% on the estate value above $50,000. The Alberta: the flat fee of $250 (the "probate fee" — the "estate administration fee" — the lowest in Canada). The Quebec: the "court fees" for the "estate liquidation" (the notarial will avoids the probate).
• Probate avoidance: The assets that pass outside the will (the "non-probate assets" — the "jointly held property with the right of the survivorship", the "designated beneficiaries" on the life insurance, the RRSP, the RRIF, the TFSA, and the "alter ego trust" or the "joint partner trust") avoid the probate process and the probate fees.

Deemed Disposition & Spousal Rollover

• Deemed disposition on death: All the capital property (the stocks, the bonds, the ETFs, the mutual funds, the real estate, the business property) is deemed to have been sold at the fair market value. The capital gain (or the loss) is reported on the "terminal return" (the final T1 return of the deceased).
• Spousal rollover: The property that passes to the spouse (or the "spousal trust") is transferred tax-free at the "cost base" (the "tax-deferred rollover" — the spouse inherits the deceased's adjusted cost base). The spousal rollover applies to the capital property, the RRSP, the RRIF, and the TFSA.
• Principal residence: The principal residence is deemed to have been sold at the fair market value, but the principal residence exemption (the PRE) can eliminate the gain. The PRE for the deceased's final year is available for the "ordinary residence" (the home that was the principal residence at the time of the death).

Trust Planning

• Alter ego trust: The trust created by the individual (the "settlor") for the individual's own benefit during the lifetime. The alter ego trust avoids the probate on the trust assets (the assets pass to the beneficiaries outside the will).
• Joint partner trust: The trust created by the spouses (the "joint settlors") for the benefit of both spouses during the lifetimes. The trust assets pass to the beneficiaries outside the will (the "probate-free transfer").
• Testamentary trust: The trust created by the will (the "testamentary trust"). The testamentary trust is used for the minor beneficiaries, the disabled beneficiaries, and the "spousal trust" (the trust for the surviving spouse). The testamentary trust is taxed at the graduated rates (the "progressive" tax rates for the trust).

For the RRSP and the RRIF rollover rules, see our RRSP Guide →. For the TFSA successor holder and the death of the TFSA holder, see our TFSA Guide →.