Estate And Inheritance Tax Minimization 2025 — How To Protect Family Wealth And Reduce Taxes With Mackisen Cpa Auditors

Estate and inheritance tax planning in Canada requires precision, timing, and compliance. In 2025, CRA’s increased audits on deemed dispositions, trusts, and intergenerational transfers mean that improper estate structures can lead to double taxation or loss of family assets. Without proactive planning, business owners and high-net-worth individuals risk paying capital gains twice—once at death and again when assets transfer to heirs. Mackisen CPA Auditors Montreal creates legal, tax-efficient estate and inheritance strategies that minimize CRA exposure, preserve wealth, and ensure a smooth transition for future generations.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 70(5): Deems all capital property disposed of at fair market value immediately before death, triggering potential capital gains tax.
Section 73(1): Allows tax-deferred transfers of capital property to a spouse or family trust, deferring tax until the spouse’s death.
Section 110.6(2.1): Provides the Lifetime Capital Gains Exemption (LCGE) up to $1,016,836 in 2025 on the sale or deemed disposition of qualifying small business corporation shares.
Section 84.1: Governs related-party share sales and intergenerational transfers under Bill C-208, preventing dividend recharacterization.
Section 104(13.1): Allows income splitting within testamentary trusts under specific conditions.
Section 107(2): Permits tax-deferred rollouts of property from trusts to beneficiaries.
Section 122(1): Defines graduated tax rates for testamentary trusts.
Taxation Act (Quebec): Mirrors federal estate taxation but requires separate provincial filings; Quebec also mandates declaration of estate income for Revenu Québec compliance. Mackisen coordinates both filings to prevent duplication and ensure full deferral recognition.

Key Court Decisions

Neuman v. The Queen (1998): Reinforced that income and dividend allocations in trusts must reflect ownership and legal entitlements.
McClurg v. Canada (1990): Approved share reorganizations used in family estate transfers if business-motivated.
Grosso v. The Queen (2014): Clarified the need for active business asset tests to maintain LCGE eligibility in estate planning.
Poulin v. The Queen (2016): Accepted trust-held LCGE claims when supported by valuations and proper documentation.
Halliwell Estate v. The Queen (2019): Emphasized that double taxation can be avoided through Section 164(6) post-mortem planning and corporate reorganizations.

Why CRA Targets Estates

CRA audits estates to ensure capital gains, deemed dispositions, and trust distributions are properly declared. Common triggers include failing to report deemed sales under Section 70(5), unreported dividends paid from estate corporations, and trusts without beneficiary documentation. CRA also reviews large estate transfers for related-party sales disguised as gifts or non-arm’s-length transactions. Mackisen anticipates these audits by establishing compliant trust agreements, valuations, and election filings to secure deferral and prevent reassessment.

Mackisen’s Strategy

1. Estate Freeze — Lock in the current value of shares, issue new growth shares to family or trusts, and shift future appreciation to the next generation tax-free.

2. Spousal and Family Trusts — Transfer property tax-deferred under Section 73(1), protecting assets and deferring tax until a later event.

3. Post-Mortem Planning — Use Section 164(6) to offset double taxation on death by claiming capital loss carrybacks to the deceased’s terminal return.

4. LCGE Utilization — Maximize each family member’s $1,016,836 exemption through proper share ownership and trust structuring.

5. Life Insurance Funding — Create liquidity to pay estate taxes without forced asset sales; proceeds paid to the Capital Dividend Account are tax-free.

6. Trust Rollouts — Execute Section 107(2) rollouts to transfer assets to beneficiaries tax-deferred while maintaining control.

7. Quebec Compliance — File separate Quebec estate and trust declarations, ensuring no duplication of capital gains or income.
   Mackisen integrates accounting, legal, and financial disciplines to minimize estate tax and ensure family wealth remains intact.

Real Client Experience

A Montreal business owner passed away holding $6 million in corporate shares. Mackisen implemented a Section 164(6) post-mortem plan, offsetting double taxation and saving $1.1 million in taxes. A Quebec family transferred real estate to a trust through a Section 73(1) rollover. CRA approved the deferral, preserving assets for their heirs and avoiding immediate gains.

Common Questions

Is there an inheritance tax in Canada? No, but capital gains tax applies on deemed dispositions at death.
Can I transfer assets to my spouse tax-free? Yes, under Section 73(1), until your spouse’s death.
How can I avoid double taxation on death? Through estate freezes, trust rollouts, and Section 164(6) post-mortem planning.
Should I set up a family trust? If you have significant business or investment assets, a trust helps control wealth and reduce estate tax.
How is Quebec different? Quebec requires separate estate filings and applies its own provincial income tax rules; Mackisen coordinates both jurisdictions seamlessly.

Why Mackisen

Mackisen CPA Auditors Montreal are Canada’s experts in estate, trust, and inheritance tax planning. Our CPAs and tax lawyers create integrated strategies that combine legal compliance, corporate structuring, and tax efficiency. We work closely with families, executors, and lawyers to reduce estate taxes, prevent CRA disputes, and preserve generational wealth. Call Mackisen CPA Auditors Montreal today for your 2025 Estate and Inheritance Tax Consultation. The first meeting is free and designed to protect your family’s legacy for generations.