The passing away of a loved one brings immense emotional stress and taxes are the last thing on the minds of family and friends at such a time. However, taxes for the deceased individuals have to be filed and depending on the estate plan of the deceased individual, filing taxes can be a simple matter or a very complicated one.
In an event of death, the first step is to report the death to Canada Revenue Agency, Service Canada for discontinuing pensions and all relevant financial institutions. The executor should obtain the copy of Last Will. A death certificate should be obtained from the Funeral Director and sent to the Canada Revenue Agency as well.
Filing the Final Tax Return:
The assets of an individual are deemed disposed at the time of death. This may create large capital gains and therefore huge tax liabilities at death if proper estate planning was not done during the lifetime of the deceased. Also getting the relevant paperwork and T slips to determine the income of the deceased can be tedious in most cases.
All the assets of a deceased are rolled over into an estate at the time of death until the assets are distributed to the beneficiaries by the trustee of the estate. The Last Will of the deceased may also instruct to keep some assets in the estate for a long period of time.
The whole process takes a long time and any income generated by the estate during this time should be reported by filing Trust Returns. Trust Returns are way more sophisticated than normal taxes and efficient tax planning can save a lot of tax dollars for the family of deceased.
Plan today to Avoid Tax troubles in the future
Tax Experts are capable of handling the most complicated estate returns but what can be even better is developing an efficient estate plan. If you have a well-designed Last Will, it will be the biggest gift that you can leave for your family and friends. The legal procedures are getting complicated by the day and it is critical for all Canadian taxpayers to have a Will in place.