So, you’ve been named the beneficiary of an inheritance and, like many Canadians, you’re probably wondering what it will mean for estate tax? If you’re assuming you’ll have to take a big hit, you might be surprised to learn that that’s probably not the case.
Let’s have a look at what you’ll have to pay, and what you won’t.
Canada doesn’t have an inheritance tax.
The good news is, in Canada, there is no inheritance tax. If you receive a disbursement from an estate in the form of cash or property, you won’t be taxed on it. However…
Canada DOES have an estate tax.
While the beneficiary of an inheritance is not taxed for receiving that inheritance, the deceased individual’s estate itself is taxed before it can be fully disbursed to the beneficiary. After an individual has passed, they are considered to have liquidated their property at the time of death at fair market value and are taxed accordingly. Additionally, the estate will likely be charged a probate fee. Probate is the legal process by which a will is certified by the court as a legal document, protecting the executor and anyone acting under the will.
If the inheritance is coming from a spouse or common law partner, you may not have to pay any taxes at all.
If you are inheriting property from a spouse or common law partner, that property may be non-taxable if it is a principal residence. When a spouse or common law partner decides to sell the property or assets they inherited from the deceased, or when they themselves eventually die, taxes will have to be paid on the full capital gain made from the time the deceased spouse acquired the property. Additionally, jointly held assets between the deceased and their spouse or common law partner, such as joint bank accounts, RRSPs, and jointly owned property, may be exempt from probate as well.
An inheritance is not considered a marital asset.
In Canada, an inheritance is not considered a marital asset, and is therefore not subject to equitable distribution in the case of a divorce. An inheritance is the sole property of the individual that received it. However, if that inheritance is placed in a joint account, the courts consider that to be a comingling of assets. The inheritance would more than likely be treated as a shared marital asset in the case of a divorce, and divided accordingly.
An inheritance advance loan can provide you cash right away.
An inheritance advance loan allows you to borrow against your inheritance, using your inheritance as collateral for the loan. It allows you to receive a portion of your inheritance without any waiting time, to cover immediate expenses, pay off debts, or cover any other costs. Inheritance advance loans offer beneficiaries the flexibility to access their inheritance funds when needed, rather than having to wait for the often lengthy probate process to run its course.
To learn more about inheritance advance loans, contact Greenbridge Capital and speak with their team of experts to see if it’s right for you.