Estate planning: Canada vs. the US.

Estate planning: Canada vs the US. As a client of the McClelland Financial Group, you already have a Financial Plan that helps you plan your life and build a successful future. So what does an Estate plan offer?

An estate plan is a review of what happens when you die. Not just who inherits your assets - that's covered in your Will. An estate plan also deals with how your heirs receive those assets, how they are taxed and what we can do to minimize those taxes. An estate plan can also help you to leave more to charities, create a bigger legacy or control the distribution of your assets long after you are gone.

Estate taxation in Canada is based on the theory that all of our assets are deemed "sold" in the year of death which triggers any embedded taxes in those assets. For example, RRSP's and RRIF's are collapsed and added as income in the year of death. Non-registered investment accounts are also considered sold and any unrealized capital gains are calculated and taxed. Same thing for your cottage or other investment properties, they are considered sold in the year of death even if you don't actually sell them. Your home is tax free, however, it does get hit with probate tax. I will discuss probate in more detail in a future article.

The United States treats your estate very differently than Canada. In the U.S., your estate only get taxed if it is in excess of $5,430,000 U.S. This means that less than 0.2% of the US population will see their estate taxed. Now, don't think that because you have property in the U.S., you are now off the hook on any U.S. taxes. Unfortunately, this exemption only applies only to U.S. citizens or residents. As a Canadian, your exemption on US property drops from $5.34 million to just $60,000 U.S. This means that if your US property is valued over $60,000 U.S., then you have to pay U.S. taxes on your property. Keep in mind that this $60,000 limit also includes the value of any U.S. stocks owned directly. Your U.S. component of your Managed portfolio is not included in this calculation.

As you can see, your Estate Plan can become very complicated and as the tax rules are constantly changing, so too should your Estate Plan. Call Jorge today to book your Estate Planning meeting.

Jorge Ramos, CFP, CLU, CHS
Senior Estate Planning Consultant
Assante Estate and Insurance Services Inc.

A new yardstick for an old debate.

Morningstar's Active/Passive Barometer

Few investment topics are as hotly debated as the merits of active and passive investing. The debate will continue to ebb and flow with the regular cycles of active managers' collective out- or underperformance relative to their benchmarks and a fast-growing and rapidly evolving field of passive alternatives. In order to ground this debate with data that reflects investors' shared experience, Morningstar is starting to publish an Active/Passive Barometer. This is a semiannual report that measures the performance of U.S. active managers against their passive peers within their respective Morningstar Categories.

Read Full Article Here
Ben Johnson, CFA, is director of global ETF research for Morningstar
and editor of Morningstar ETFInvestor.

The Latest

Home Renovations

A recent CIBC poll showed that 42% of Canadian homeowners plan to renovate this year. The average budget is projected to be $17,000 with the majority of the work focused on basic maintenance such as general repairs, painting, flooring, landscaping, kitchens and bathrooms.


With the prices of a low rise home in the GTA exceeding $775,000 and the price of a condo averaging $450,000, many homeowners are choosing to renovate their existing properties in lieu of paying the fees involved in a move. The existence of low interest rates and high rising home prices are boosting the demand for home renovations amongst Canadians.

When planning renovations, it is important to ensure you have hired someone with experience for the job. Some things to think about are ensuring all of the paperwork has been laid out in advance of the commencement of any work. Paperwork would include all work to be completed with costs clearly laid out, along with a projected timeline for the work. Ensuring who you hire has a minimum of $2 million in liability insurance and they have all applicable licenses and permits in place in advance of any work being done. If financing is required for the project, ensure you speak to a professional and have your budget properly laid out in advance.

Should you wish to learn more about mortgage solutions, please let us know and we would be happy to put you in touch with mortgage brokers within our professional network.

Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.

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