Tax liability on your RRSP and capital gains
Money remaining in your RRSP and RRIF accounts may become taxable upon your death. A spousal rollover or a transfer to an eligible dependant or disabled child/ grandchild can defer the taxes but only until that person's death.
A similar situation applies to your capital assets, such as stocks and certain real estate. Second (or third or fourth) properties, such as cottages or vacation homes, are deemed "sold" after your death, which could result in a taxable capital gain. If the property has been in the family for decades, the impact on your estate and beneficiaries can be particularly hard, as the difference between the purchase price and the market value on the date of death can be immense.
This type of deemed disposition at death may also apply to personal property such as: artwork collections, jewelry, valuable collections, etc. If the value of those items has increased over the years, the tax implication could be onerous for the estate.
Too often, significant and meaningful family assets have to be sold to pay the resulting taxes. Alternatively, RRSP or RRIF proceeds, sometimes the most liquid funds available to the estate, may have to be used to cover remaining taxes or fees instead of going to heirs.
Your MD Life Plan death benefit can be used to pay the taxes your estate may owe. This preserves the value of your estate for your beneficiaries and ensures that your death does not become a financial burden for the rest of your family. Your properties and family heirlooms stay where you want them - with your family.
To learn more, contact your MD Management Financial Consultant or call 1 800 267-2332 to be put in touch with a MD Management office near you.
