Yes, we are mere mortals.

• Author: Taerum, Chastine M.
• Position: TAX law

It is hard for some people to think that they are mere mortals, but, alas, it is true. Once you accept this fact, you will be able to effectively and properly estate plan. Estate planning may be simple or complex. However, the goal is typically to decide how your assets will be distributed while ensuring that the government gets as little of your money as possible. Estate planning is a very broad topic and is too large an area to discuss in one article. Thus, I will be covering a number of estate planning issues in the next few articles, issues that one should take into account prior to conducting any estate planning.

There are a number of devices that people should consider including in their estate planning tool kits:

1. Wills;

2. Powers of attorney;

3. Personal directives;

4. Trusts;

5. Shareholder agreements;

6. Estate freezes; and

7. Life insurance policies.

   What happens to your property at death?

   Under subsection 70(5) of the Income Tax Act (Canada) (the Act), taxpayers are deemed to have disposed of their property immediately before their deaths. There are, however, a few "rollover" provisions within the Act, which allow the tax burden that would otherwise be triggered upon your death to be deferred.

   Some examples include the following:

1. Subsection 70(6)--Spousal rollover: The following conditions need to be met in order to use this rollover:

   1. The deceased was a resident of Canada before death;

   2. There was a transfer of property to the deceased's spouse as a consequence of death;

   3. The deceased's spouse was a resident of Canada immediately before the deceased's death; and

   4. The property vested indefeasibly in the spouse within 36 months or longer with the Minister's discretion (written application for an extension is required). In general terms, "vested indefeasibly" means giving a property owner an unconditional, absolute right to the property that cannot be revoked, defeated or lost.

2. Subsection 70(6)--Spousal trust rollover: The following criteria must be met for this rollover:

   1. The deceased was a resident of Canada before death;

   2. There was a transfer of property to the deceased's spouse as a consequence of death;

   3. The trust was created by the deceased's will;

   4. The trust--that is the legal arrangement itself--was resident in Canada immediately after the time the property vested indefeasibly in the trust;

   5. The deceased's spouse must be entitled to receive all income of the spousal trust before the spouse's death; and

   6. No person...