Tax on estate monies

[Kim473]

What can a person expect for taxes to be paid on RIF funds to be distributed on a estate ?
10%
30%
50%
??????

[TBark]

I was told it’s 40% off the top, meaning right upon dispersement.
They don’t wait til you do ur taxes to calc.
I kinda hope it’s not accurate.

TBark

[Drewski Canuck]

The post is a little confused. Is there a surviving spouse?

Are you talking about what the Bank will hold back and remit to CRA?

Are you talking about a "Terminal Year Return" based upon all the RRSP / RRIF / LIRA values being taken into account in the Terminal year?

There will be no interim distribution if the Trustee is wise, until an Accountant has determined the tax liability of the Estate. The risk is of course making the bequests and finding a further TAX liability to the Estate from CRA which now is a Trustee's liability.


Drewski

[wildbill]

Lots, painful!

[bat119]

I went through this last year, in Canada the deceased person's assets are considered as income on their final income tax return taxes are paid on the final total the amount depends on the size of the estate.

Canada Estate Tax
In Canada, unlike other countries, there is no tax applied to beneficiaries inheriting an estate following the death of a loved one. This means there is no death tax or ‘inheritance tax’ in the same manner that other countries deal with taxation following a death or inheritance. However, this does not mean that there are not important tax issues that need to be considered.
Canada assumes that a deceased person liquidates all assets one minute prior to death. All these assets are transferred to the dying individuals estate. Depending on how the estate is set up there may be taxes that require payment by the estate itself.
It is always a good idea to review some basic estate planning concepts to minimize the potential tax burden.

http://agtax.ca/estate-taxes

[skidderman]

My read on Rif's is this:
If one person in a marriage passes the rif goes to the survivor. (No tax taken off)
Upon the passing of both full or in the case of a single person Rif's are taxed to the estate all at once and it can be easily 50% tax depending on the amount. I do not know the procedure but I do know the taxes on an RRSP or Rif upon passing is basically half.

[Homesteader]

Originally Posted by skidderman

My read on Rif's is this:
If one person in a marriage passes the rif goes to the survivor. (No tax taken off)
Upon the passing of both full or in the case of a single person Rif's are taxed to the estate all at once and it can be easily 50% tax depending on the amount. I do not know the procedure but I do know the taxes on an RRSP or Rif upon passing is basically half.

This is exactly my experience, and understanding as well.

So to answer the op, the taxes will vary just like anyone else’s return, the brackets change based on income level for the year.

[Kim473]

Wow ! 50% that sucks. Hope its not that much. Gotta find a really good estate tax accountant now.

[MoFugger21]

On typical RRIF withdrawals (RRSP withdrawals as well), the tax withheld by the bank/investment co. goes as follows:

• 0% withholding on minimum required withdrawals (RRIF's only)
• 10% withholding - up to $5,000
• 20% withholding - $5,000 - $15,000
• 30% withholding - Over $15,000

The total tax owing on the final return with depend on the income level of the deceased at the time of death and the tax owing is paid by the estate and the RRIF is paid out to the beneficiaries tax free. UNLESS... there isn't enough money/assets in the estate to cover the taxes owing, then CRA can go after the beneficiaries.

[RavYak]

As others have made it clear it goes off income tax brackets. Get an idea of the value and then figure out what the income tax for that value would be.

Don't forget it is an incremental system. Although you could possibly pay 48% maximum(15% provincial and 33% federal) that would only be on the values in excess of 305k).

For the first 93k you are looking around 28%, then after that slowly higher percentages approximately every 25k.

[Kim473]

Just found out from the financial institution that the RIFF is in. The total tax will be close to 45% when averaged out. Justin's new tax hikes are kicking in and it's worse than it was 2 year ago. Yup, were gonna tax the wealthy bs.

Was told that rather than your money in a rsp , pay $100,000 and buy $ 500,000 life insurance, tax free monies is probably better. Pay 20% to purchase compared to 45% tax.

Governments gotta get there share.