There are quite a few estimates predicting that the
from
to the subsequent generations — primarily
or
— can be within the vary of $1 trillion to $2 trillion in Canada throughout the subsequent 10 to twenty years. The taxman, in fact, is poised to take a major chunk of that wealth.
Given this looming switch, the
enterprise has been thriving. Property planning entails the deliberate switch of wealth in an orderly vogue and requires a large number of disciplines, together with tax, authorized, accounting, funding planning, insurance coverage, belief administration and philanthropy.
Many of those professions provide programs on property planning, however there are few organizations that embody the multitude of disciplines required to plan and implement property plan. The designation granted by the
Society of Belief and Property Practitioners
(STEP) is one in every of them. It gives quite a few programs, conferences, articles and different experience to assist practitioners plan their shoppers’ affairs with the multidisciplinary method that could be a should. STEP’s rigorous coaching equips practitioners with nice instruments.
There aren’t any cookie-cutter approaches to property planning. You would possibly count on that your native accountant, insurance coverage adviser, funding adviser or lawyer can have all of the solutions. They most likely don’t.
I recall studying a full-page newspaper article about property planning whereas vacationing greater than 25 years in the past in Saskatchewan. It was written by an area insurance coverage adviser who espoused a way of property planning that advocated having “mother and pop” sit down with all their final beneficiaries across the “kitchen desk” in a deliberate assembly facilitated by him the place the final word property plan can be laid out. If there have been any issues or points, they’d be handled proper then and there.
I used to be completely satisfied that method labored for him, however I knew that taking that type of method with most of my shoppers can be a catastrophe. For Seinfeld followers, it jogged my memory of
, the place everybody gathers round a pole at dinner for an “airing of the grievances.”
Property planning can contain highly-charged feelings that aren’t normally resolved by merely sitting round a desk and having it out or airing one’s grievances. It entails cautious coordinated planning with the assorted disciplines and an appreciation of the complicated feelings and psychology which might be usually at play.
It additionally entails aggressively protecting updated since legal guidelines and authorities administrative procedures can shortly change and materially have an effect on an property plan. For instance, you need to take into account if one other nation has jurisdiction over a few of your property that you just want to go alongside. Many international locations will cost a tax — in some kind or vogue — on the switch of these property, akin to actual property, both throughout your lifetime or on dying.
The obvious instance is the
that applies to its residents and U.S. domiciles. People can benefit from an exemption, however the quantity has been a political soccer over time.
For 2025, the quantity is US$13.99 million, but it surely was scheduled to say no to roughly US$7 million on the finish of this yr. Nonetheless, President Donald Trump’s
has erased that risk by making the exemption quantity US$15 million for 2026 and indexing it to inflation for yearly after.
U.S. property tax charges are progressive, with 40 per cent being the highest charge. Any property in extra of the exemption quantity within the yr of dying can be topic to the highest charge on worldwide property for U.S. residents, no matter the place their wealth is held.
The U.S. property tax additionally applies to non-U.S. individuals, together with many Canadians, in the event that they maintain U.S. property akin to shares and actual property at dying. Can affected Canadians avail themselves of the complete exemption quantity? No.
Nonetheless, Canada is one in every of a handful of nations that the U.S. has agreements with that allow affected individuals to make use of a portion of the exemption quantity, with the portion being the ratio of the truthful market worth of U.S. property at dying in comparison with the deceased’s truthful market worth of worldwide property multiplied by the present yr’s exemption quantity.
For instance, let’s say Mr. Jones, a Canadian who is just not a U.S. individual, owns US$1 million of Apple Inc. inventory at dying and a US$2-million dwelling in Florida. His worldwide property is price US$20 million when he dies on Feb. 1, 2026. His U.S. property are US$3 million, or 15 per cent of his property. Accordingly, he can be entitled to fifteen per cent of the 2026 exemption quantity of US$15 million, or US$2.25 million.
Overly simplified and ignoring any forex implications, Mr. Jones’ U.S. property tax legal responsibility can be US$300,000 (US$3 million minus US$2.25 occasions 40 per cent).
The above can be separate and aside from his Canadian tax liabilities arising from deemed tendencies upon dying. Would his property be capable to use the U.S. property tax legal responsibility to offset any Canadian tax? Maybe. However such aid could be very restricted given the restrictions within the Canada-U.S. taxation treaty.
What does all of this imply? In brief, the $1-trillion to $2-trillion wealth switch is effectively underway. Creating an efficient property plan requires greater than a
from 20 years in the past, just a few beneficiary designations or the recommendation of a single skilled who claims to do property planning.
It calls for a coordinated, multidisciplinary method — tax, authorized, accounting, funding, insurance coverage, belief and philanthropic experience — working in live performance. It calls for fixed vigilance to maintain tempo with shifting legal guidelines, cross-border complexities and altering household realities.
Property planning is an ongoing act of stewardship. Carried out poorly, it’s an costly reward to the federal government — to assist fund their newest spending spree — and a recipe for household strife.
Kim Moody, FCPA, FCA, TEP, is the founding father of Moodys Tax/Moodys Non-public Consumer, a former chair of the Canadian Tax Basis, former chair of the Society of Property Practitioners (Canada) and has held many different management positions within the Canadian tax neighborhood. He may be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.
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