Estate And Inheritance Tax Minimization 2025 — How To Protect Your Family’s Legacy And Reduce Taxes

In 2025, estate and inheritance tax planning in Canada has become more important than ever. As CRA strengthens enforcement around deemed dispositions, trusts, and intergenerational transfers, families risk double taxation and unnecessary wealth loss without proper planning. Mackisen CPA Auditors Montreal creates comprehensive estate and inheritance strategies that ensure your assets are transferred smoothly, your taxes minimized, and your legacy preserved for generations.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 70(5): Deems all capital property disposed of at fair market value at death, creating capital gains that can trigger large tax bills if not planned properly.
Section 73(1): Permits tax-deferred transfers to a spouse or family trust, deferring taxes until the spouse’s death or later disposition.
Section 110.6(2.1): Allows the Lifetime Capital Gains Exemption (LCGE) of $1,016,836 on the sale or deemed disposition of qualified small business corporation (QSBC) shares.
Section 84.1: Governs related-party share transfers and ensures compliance under Bill C-208, allowing legitimate family transitions.
Section 107(2): Enables tax-deferred rollouts from trusts to beneficiaries.
Section 164(6): Provides post-mortem loss carrybacks to reduce or eliminate double taxation on death.
Taxation Act (Quebec): Requires separate estate and trust reporting for Revenu Québec, coordinated with CRA filings to avoid duplicate taxation. Mackisen ensures both jurisdictions are aligned.

Key Court Decisions

Halliwell Estate v. The Queen (2019): Affirmed that proper Section 164(6) planning can prevent double taxation of estate shares.
Neuman v. The Queen (1998): Reinforced that dividends must follow legal ownership entitlements; trust structures must be documented accurately.
Poulin v. The Queen (2016): Accepted trust-held LCGE claims when valuations and compliance were properly maintained.
Grosso v. The Queen (2014): Emphasized that corporations must maintain active-business status to preserve LCGE benefits in estate transfers.
McClurg v. Canada (1990): Supported valid share reorganizations designed for family succession and estate planning.

Why CRA Targets Estates

CRA audits estates to confirm accurate reporting of capital gains, dividends, and trust income. Common triggers include missing deemed disposition filings, unreported estate income, and improperly documented family trust rollouts. CRA also reviews life-insurance CDA payments for proper tax treatment. Mackisen prevents these risks by creating compliant trust structures, preparing detailed valuations, and submitting all required CRA and Revenu Québec filings within statutory deadlines.

Mackisen’s Strategy

1. Estate Freeze — Lock in today’s share value and issue new growth shares to the next generation, deferring future tax while preserving control.

2. Spousal Rollover — Transfer property to a surviving spouse or trust under Section 73(1), deferring capital gains until later disposition.

3. Post-Mortem Planning — Implement Section 164(6) strategies to offset capital gains with losses, preventing double taxation.

4. LCGE Optimization — Ensure qualifying business shares meet QSBC conditions so family members can each claim their $1,016,836 LCGE.

5. Insurance Funding — Use life insurance to fund estate tax liabilities; payouts enter the Capital Dividend Account (CDA) tax-free.

6. Trust Rollouts — Execute Section 107(2) rollouts transferring property to beneficiaries without triggering tax.

7. Quebec Integration — File estate, trust, and corporate returns for CRA and Revenu Québec simultaneously to ensure synchronization.
   Mackisen builds compliant, fully documented estate plans that protect family assets while minimizing tax exposure.

Real Client Experience

A Montreal entrepreneur passed away leaving $8 million in corporate assets. Mackisen implemented a Section 164(6) post-mortem reorganization, saving $1.4 million in taxes by eliminating double taxation. A Quebec real estate family created a spousal trust under Section 73(1), deferring $950,000 in capital gains and preserving wealth for future generations.

Common Questions

Is there inheritance tax in Canada? No, but capital gains tax applies to deemed sales at death.
Can I transfer assets to my spouse tax-free? Yes, using Section 73(1) spousal rollover provisions.
How can I prevent double taxation on death? Through Section 164(6) planning and estate freezes.
Do family trusts still make sense in 2025? Yes, they allow control, deferral, and tax efficiency when structured correctly.
How is Quebec different? Quebec requires separate estate filings; Mackisen ensures both jurisdictions are fully coordinated.

Why Mackisen

Mackisen CPA Auditors Montreal are Canada’s trusted advisors for estate, inheritance, and family trust tax planning. Our integrated CPAs, CBVs, and tax lawyers design compliant estate freezes, rollovers, and post-mortem reorganizations that minimize taxes and protect your legacy. We handle every step—from valuations to CRA filings—ensuring your estate transfers smoothly and securely. Call Mackisen CPA Auditors Montreal today for your 2025 Estate and Inheritance Consultation. The first meeting is free and focused on securing your family’s future