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@@gwine9087 only if he holds after he receives it as beneficiary of the estate, it goes up in value from that point forward and he sells it. The gain would be calculated as the difference between the sale price when he sells it and the probated value, minus any capital improvements and transaction costs.

Hi Bruce. Not exactly. The beneficiary will receive the funds tax-free. But, assuming that the beneficiary is not your spouse or common law partner, the full value of the RRIF on the day of your passing is added to your income on your final tax return. So, your estate will have a tax liability and it is possible that the funds won't be available in the estate to pay the bill. If your executor and your beneficiary(ies) are the same person, they can cover this from the proceeds of the RRIF. But if the beneficiary is not an executor, some other provisions would need to be made in order to cover that tax bill. Hope this helps.

@@WalhoutFinancial The beneficiary is my sister. Thank you for your answer.

Correct, the son holding the house and selling would create a separate tax scenario for the son - but not the parents. Not sure about the second part of your question and the calculation of taxes from the time he is added on title. If the son was only added on title for estate planning purposes I believe that "beneficial ownership" would only pass to the son on mom/dad's death, and the cost basis would therefore be established at that point only. Best to check that scenario with your accountant in a real life situation.

That's an interesting one. I've not seen that before. I can't see how it would negate probate, even if it is possible.

@@tericoulter4426 hi Teri, this is a good question and popular so I’m going to do a follow up video on this and some other questions. Look for it by next week.

@@WalhoutFinancial Thank you - I look forward to it.

Each married "unit" (ie husband and wife), can claim one property per year the property(ies) are owned for the principal residence exemption. Therefore, if a couple owns 2 properties, they cannot "double up" on the PRE for the years that they owned them. So in this example - the second member of the couple that passes away would have to report a capital gain on their final tax return. Alternatly, the surviving spouse could immediately gift the cabin to the son when the first member of the couple passes away. Then, future growth in the value of the property would rest in the son's hands and a gain would only be triggered if he sold it or changed its use to income-producing. I hope this helps :)

@@WalhoutFinancial Makes sense. thank you very much.

Give everything away before you pass away 😅

Not necessarily. If your home is your primary residence and your executor claims the exemption on it on your final tax return after you pass away, there will be no tax to pay on your passing. When the home rolls out to your children, its "cost basis" will be at or near the fair market value at the time that it is rolled out. The only way I can see there being a capital gain for your kids is if they hold onto the house long term and then sell it down the road for a gain. Hope this helps.

@@r.c.brousseau9655 not too sure, other than I know the legal system in Quebec is quite different than Ontario where I live and where the vast majority of my clients are, and the rest of the provinces and territories.

@@WalhoutFinancial In Quebec, if you get your will done by a Notary Public [presumably they uses European style civil law?] as opposed to a lawyer [who uses English style common law?], no probate is needed.

Then the beneficiaries/family will be working through the provincial courts to apply what is called "intestacy law" which is basically the "formula" the government uses to divvy up an estate when there is no will. Way more painful and costly than having a proper will probated.

@@kevinquinlan7918 wow good question. That’s probably a separate video. The rules on farm succession are unique.

@@WalhoutFinancial i assumed as much. I’ll watch for it. Thanks

@@kathleenrothman great question. I think I’m going to do a video on that question this week or next because it’s popular. The short answer is, it’s a tool just like any other tool. In the right circumstances I think it can be used well. Sometimes people use them poorly.

I don't think so, but the jurisdiction where the assets are held may have their own process and associated fees

Seriously? Try moving to the UK. 15 grand is a drop in the bucket.

@@gwine9087 same, that's what I was saying.

they can lend the money to the estate to cover the fee, or in some cases a financial institution will lend money to the estate to cover the fee.

Ultimately, if someone names you as beneficiary in their will, you can't change it. I suppose you could refuse to take the cash/property from the estate, but I wonder why someone would do that.

@@WalhoutFinancial thanks for the reply. Appreciated

My sister had all sunts accounts and home added to her as ownership worked.

@@cherihoward2323 It can work, it just carries risks.

I haven't seen this scenario in my practice, but I believe that if the lawyer wrote it up as joint with rights of survivorship, the property would pass to the surviving joint owner and there would be no tax owing for the first joint owner. Check with your lawyer to be sure.

@georgeriley2297 that’s true in the case of the portfolio. Debt that is secured against the house could reduce the probate amount owing.

@@georgeriley2297 good question. I will address it in a follow on video in the next week or so because it’s come up a few times in the comments. Thanks for watching!

That’s what I think too

When my husband passed away ,he had a will, my name was on the deed for the farm, joint bank account there was one account with $20,000 in and we did not have to go thru probate. Now when I go with many beneficiaries who are not on the deed or bank accounts and some investments I imagine that’s where probate comes in.

The financial institutions that hold the accounts of the deceased can request a probated will at their discretion. It is meant to cover their bases in case someone else comes out of the woodwork later and says that the person who previously came forward was not the correct executor.

@@perdst possibly. Perhaps capital gains tax for you if the property has gone up in value since the time you took legal ownership of it and possibly land transfer taxes, which would apply on many real estate transactions regardless of whether it is an estate or not.

@@WalhoutFinancial thank you so much for the information. 👍

Deed of Gift to the kids while you are still alive

Do you actually know what that capital gains tax amount is? I recently sold a non primary residence property for $345,000. After improvement costs, deduction of time spent living on it, original cost deduction, we paid under $8,000 based on the current rate of our income tax which as a retired guy is the lowest rank. And that was on only 20% of the net total earned. You still don’t pay on the whole amount earned.

If you are the beneficiary of life insurance, pension funds and RRSPs you are required to pay taxes correct? If you receive money if you sell the home are you required to claim any monies after the mortgage has been paid as capital gains? What happens to the estate if the main beneficiary sues the executor for dereliction of duties?

You can only claim one residence that you own and occupy regularly per calendar year for the principal residence exemption. So, the idea of moving from one to the other over the span of a few years and selling them over that timeframe and exempting all of them fully using the principal residence exemption won't work. The divorce idea is pretty out there, but the same rules apply. A "married unit" can only claim one principal residence per year that they are married and living together. Divorce will not allow you to "rewind the clock" and be able to claim the PRE on 2 properties during the years you lived together. Sorry for the bad news, but I hope this clarifies things.

@@feykakaroukas5084 at the time the probate application is filed, likely before the executor has sold the home.

@@WalhoutFinancial Thank you!

US estate taxation rules would apply.

Glad to help

Exactly! Thanks for watching :)

@@DavinaHader many people do this. It can work but it carries risks. Based on all of the questions I got on this video I’m going to do a follow up addressing this and many of the questions in the next week or so

@@Cindy-bee probate may still be required by the financial institution to release the savings account.

@@WalhoutFinancialyup!, unless it’s in a ‘joint or’ account (except Quebec)

Careful with savings acct as it shows up as estate assets. Best to keep bulk in investments with listed beneficiary. In Manitoba big cost for land transfer fees with inheritance of property (based on value).

If your bank accounts are made joint there will be no taxes to pay. I just went through all of this myself. My mother put me on as joint on bank account, and investments, the only exception was RIFs could not be made joint. I only had to pay income taxes the following year on her investment income which was paid out of the estate account.

@@siobhanw2622 Thank you I will consider that option.

My lawyer told me last week if your house was built before the 90s you dont pay probate when it is gifted to a benificiary😊

@@Quince828 the financial institutions where accounts are held will request probate at their discretion. I imagine that many lawyers will ask for probate if changing ownership and title on a house.

Wow, Ontario is getting ripped off big time, glad I’m in Alberta too

That's the most it should be, Ontario is so greedy!

Ontario gets ripped off a lot.

@@erinames7783 I’m reading that a lot…all the BS with protests etc, be a hard time living there for me

😮. Lucky to live on AB!!!

@@kellyprice1024 possibly but that carries other risks that I will discuss in another video soon