The Importance of Estate Planning: Ontario Woman Faces A Harsh Lesson After Her Parents’ Passing
I'd like to share a recent story that really resonated with me, and it’s one I think every Canadian family should hear. An Ontario woman was hit with a staggering $669,000 tax bill after both of her parents passed away within one year of each other. The situation is heartbreaking, but it’s also a lesson about the financial burdens that can happen without proper estate planning in place. Here’s what happened. When the woman’s mother passed away, her Registered Retirement Savings Plans were transferred to her husband, which is allowed tax-free under Canadian rules. But when her father passed months later, all of the RRSPs were considered income in his final tax return. Because of their size, they pushed his income into a higher tax bracket, resulting in 50% of the funds being lost to taxes. Then came the family cottage. Although the cottage had become the parents’ primary residence in their older years, it hadn’t always been. For the years it was considered a secondary property, cap...