Wycliffe Vision Newsletter - March 2022

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Did you know that by simply leaving everything to your heirs you can unintentionally expose your estate to substantial taxes? And Canada Revenue Agency is always paid first. But there are many ways to reduce the impact of taxes on your estate while leaving more for those you love, and for causes you care about like Wycliffe College. HERE ARE SOME SUGGESTIONS THAT WILL HELP TO REDUCE THE IMPACT OF ESTATE TAXES: 1. Place assets like your house or bank accounts in name jointly with your spouse. This will simplify your estate’s administration, enable assets to be released more quickly to your spouse and reduce probate fees. Assets owned jointly automatically revert to the joint owner and are not considered part of your estate. 2. Leave your registered retirement funds to your spouse so they can be moved tax-free into their own RRSP or RRIF. If you do not have a spouse, make sure you name a specific beneficiary for your RRSPs or RRIFs (this can be a loved one or a charity like Wycliffe College). If either fund goes to your estate, it will be subject to probate and taxation. Registered retirement funds that do not ‘roll over’ or get automatically transferred to a spouse as owner are also subject to tax. Naming a charity as the beneficiary for such funds creates a charitable gift. The tax relief gained from the gift of an RSP can help offset estate taxes significantly. 3. If you leave an annuity that is not jointly owned by you and your spouse, leave the entire amount to an heir or charity. If you divide that annuity between two

or more people, its cash value will go into your estate and be included as part of your taxable income. 4. Review and update your Will regularly to keep up with new family situations and changes in tax rules. 5. Remember the charities you value with a gift in your Will. In the year you die, you are deemed to have sold all your assets. Because of this, your reportable income that year can be high and the taxes you have to pay can be high as well. A gift to Wycliffe College, for example, will provide your estate with a tax receipt for the full amount of the gift, which in turn can help to offset any taxes owing. Not only can your Estate Trustee use the tax credits in the year of your death, they may also use these credits during any taxation year for the estate, or the last two taxation years before your passing. 6. Your accountant or financial planner can help you determine the ideal amount you need to gift to minimize taxation. At the same time, you can help a charity whose work you value.




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