How to Avoid Inheritance Tax
First of all, you should know that Canada does not have any inheritance tax. Instead, the Canada Revenue Agency (CRA) handles the estate as a sale, except for when the estate is inherited by the spouse or the legal partner. By this law, it is actually the estate which pays the taxes that are owed to the government, instead of the beneficiaries paying. This also means that the beneficiary does not need to worry about the taxes.
There are number of way by which you can avoid inheritance tax.
Make a will
If you are looking to avoid the inheritance tax then it is vital that you make a will. If a person dies without making a will, then the property is distributed without keeping the wishes of the owner into consideration.
Be generous and gift your assets
It is very simple that if you do not want to give away your whole property in one go then divide the assets and give them away as gifts to the children. This way you will be keeping the property in the family as well. John Whiting of the Chartered Institute of Taxation said, “If you cannot afford to give big money away, it makes sense to use the smaller allowances such as the £3,000 per person annual allowance for gifts to anybody and the ability to for parents to give up to £5,000 to their children when they marry – and that could be £5,000 from each parent casino online to each adult child.”
Create a trust
Creating a trust is one of the best ways to protect a taxable inheritance, and you would only require something between $2,000 and $5,000 to set up a trust.
Establish a limited partnership
You can establish a limited partnership by transferring real estate to your partner in order to limit the tax value of your assets. Here, the beneficiaries are given shares in the property.
Set up an estate plan
This is the best way to limit taxation. You are required to update the estate plan on a regular basis according to the tax law changes. This estate plan prevents any sort of disagreements between beneficiaries after the death of the actual owner.
Spend some of the wealth
Another way to avoid taxation is to spend some of that wealth before it can be taken into account for tax.
These are some ways, which if followed, can be instrumental in helping you avoid inheritance tax.
