When you die, there are taxes due on any income you earned in the year that you died. There may also be taxes and other fees due on cash and certain investments you owned. This can include real estate – such as a cottage – and works of art. It can even include your principal home, if you are the sole owner. Here’s how it works.
After your death, the government assesses the value of everything you leave behind in your estate. It treats your assets as though you just sold them for cash. The tax experts call this “the deemed disposition at death.”
The government does not subtract your debts, except for mortgages or other property loans, in assessing your estate. But it does not include:
- assets you gave away or sold before your death
- assets you held jointly, with the right of ownership passing to the surviving partner. Your principal home, for example, would be exempt if both you and your partner were listed as owners.
- assets with named beneficiaries. This includes life insurance and registered plans, such as a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF).
To learn more, read What can trigger immediate taxes or probate fees on my estate?
What are probate fees?
If you have prepared a will, the courts must confirm two important facts:
- that your will is valid
- that your estate trustee (also called an executor) has the power to carry out your wishes.
Your province charges a fee for this legal process, called a probate fee. Probate fees are highest in Ontario, where they equal about 1.5% of estates worth more than $50,000. Fees in this province for 2009 were set as follows:
- For every $1,000 up to $50,000: $5
- For every $1,000 above $50,000: $15
| Tip: Some provinces do not require smaller estates to pass through the probate process |
When will my estate have to pay capital gains?
Does your estate include investments or property outside a registered plan, in your name only? Have these assets gone up in value since you bought them? If you answered ‘yes’ to both of these questions, capital gains will kick in after your death -- just as if you sold or cashed these assets in during your lifetime. And under Canadian tax rules, your estate will have to pay a tax on half of the gain.
The chart below sums up the probate fees and taxes due on various assets.
At a glance: taxes and probate fees in Canada
| Asset |
Taxes |
Probate Fees |
| Unsheltered cash or investments |
Yes |
Yes |
| Family home in your name only |
No |
Yes |
| Other property in your name only |
Yes |
Yes |
| Life insurance left to your estate |
No |
Yes |
| Certain retirement savings plans |
Maybe |
No |