There are quite a few estimates predicting that the
from
to the following generations — primarily
or
— might be within the vary of $1 trillion to $2 trillion in Canada throughout the subsequent 10 to twenty years. The taxman, in fact, is poised to take a big chunk of that wealth.
Given this looming switch, the
enterprise has been thriving. Property planning includes the deliberate switch of wealth in an orderly style and requires a large number of disciplines, together with tax, authorized, accounting, funding planning, insurance coverage, belief administration and philanthropy.
Many of those professions supply programs on property planning, however there are few organizations that embody the multitude of disciplines required to plan and implement property plan. The designation granted by the
Society of Trust and Estate Practitioners
(STEP) is considered one of them. It affords quite a few programs, conferences, articles and different experience to assist practitioners plan their purchasers’ affairs with the multidisciplinary strategy that could be a should. STEP’s rigorous coaching equips practitioners with nice instruments.
There aren’t any cookie-cutter approaches to property planning. You may count on that your native accountant, insurance coverage adviser, funding adviser or lawyer could have all of the solutions. They in all probability don’t.
I recall studying a full-page newspaper article about property planning whereas vacationing greater than 25 years in the past in Saskatchewan. It was written by a neighborhood insurance coverage adviser who espoused a technique of property planning that advocated having “mother and pop” sit down with all their final beneficiaries across the “kitchen desk” in a deliberate assembly facilitated by him the place the last word property plan can be laid out. If there have been any issues or points, they might be handled proper then and there.
I used to be pleased that strategy labored for him, however I knew that taking that sort of strategy with most of my purchasers can be a catastrophe. For Seinfeld followers, it jogged my memory of
, the place everybody gathers round a pole at dinner for an “airing of the grievances.”
Property planning can contain highly-charged feelings that aren’t normally resolved by merely sitting round a desk and having it out or airing one’s grievances. It includes cautious coordinated planning with the assorted disciplines and an appreciation of the complicated feelings and psychology which are usually at play.
It additionally includes aggressively preserving updated since legal guidelines and authorities administrative procedures can shortly change and materially have an effect on an property plan. For instance, it’s important to take into account if one other nation has jurisdiction over a few of your property that you just want to go alongside. Many nations will cost a tax — in some kind or style — on the switch of these property, equivalent to actual property, both throughout your lifetime or on loss of life.
The obvious instance is the
estate tax in the United States
that applies to its residents and U.S. domiciles. Individuals can reap the benefits of an exemption, however the quantity has been a political soccer over time.
For 2025, the quantity is US$13.99 million, but it surely was scheduled to say no to roughly US$7 million on the finish of this yr. Nonetheless, President Donald Trump’s
has erased that chance by making the exemption quantity US$15 million for 2026 and indexing it to inflation for yearly after.
U.S. property tax charges are progressive, with 40 per cent being the highest charge. Any property in extra of the exemption quantity within the yr of loss of life might be topic to the highest charge on worldwide property for U.S. residents, no matter the place their wealth is held.
The U.S. property tax additionally applies to non-U.S. individuals, together with many Canadians, in the event that they maintain U.S. property equivalent to shares and actual property at loss of life. Can affected Canadians avail themselves of the total exemption quantity? No.
Nonetheless, Canada is considered one of a handful of nations that the U.S. has agreements with that allow affected individuals to make use of a portion of the exemption quantity, with the portion being the ratio of the honest market worth of U.S. property at loss of life in comparison with the deceased’s honest market worth of worldwide property multiplied by the present yr’s exemption quantity.
For instance, let’s say Mr. Jones, a Canadian who just isn’t a U.S. particular person, owns US$1 million of Apple Inc. inventory at loss of life and a US$2-million residence in Florida. His worldwide property is price US$20 million when he dies on Feb. 1, 2026. His U.S. property are US$3 million, or 15 per cent of his property. Accordingly, he can be entitled to fifteen per cent of the 2026 exemption quantity of US$15 million, or US$2.25 million.
Overly simplified and ignoring any forex implications, Mr. Jones’ U.S. property tax legal responsibility can be US$300,000 (US$3 million minus US$2.25 occasions 40 per cent).
The above can be separate and other than his Canadian tax liabilities arising from deemed inclinations upon loss of life. Would his property have the ability to use the U.S. property tax legal responsibility to offset any Canadian tax? Maybe. However such aid could be very restricted given the restrictions within the Canada-U.S. taxation treaty.
What does all of this imply? Briefly, the $1-trillion to $2-trillion wealth switch is properly underway. Growing an efficient property plan requires greater than a
from 20 years in the past, a number of beneficiary designations or the recommendation of a single skilled who claims to do property planning.
It calls for a coordinated, multidisciplinary strategy — tax, authorized, accounting, funding, insurance coverage, belief and philanthropic experience — working in live performance. It calls for fixed vigilance to maintain tempo with shifting legal guidelines, cross-border complexities and altering household realities.
Property planning is an ongoing act of stewardship. Accomplished poorly, it’s an costly reward to the federal government — to assist fund their newest spending spree — and a recipe for household strife.
Kim Moody, FCPA, FCA, TEP, is the founding father of Moodys Tax/Moodys Non-public Shopper, a former chair of the Canadian Tax Basis, former chair of the Society of Property Practitioners (Canada) and has held many different management positions within the Canadian tax neighborhood. He may be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.
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