Groupe Dupuis Paquin

Estate planning, trusts and estate freezing

There is no estate tax in Quebec neither under federal law (Income Tax Act) nor under provincial legislation (Taxation Act). When a person dies, there is a deemed disposition for all capital property. Revenue Canada considers that the deceased received the deemed proceeds of disposition of all property (including shares of companies) or immovable property.

Estate planning aims to structure financial assets in such a way that the tax payable upon death can be reduced or postponed. For example, the transfer of assets to a spouse upon death allows tax deferrals. Life insurance proceeds are mostly tax free and can be used to pay the taxes payable and can provide a capital or income to the heirs. Business owners should take steps to ensure a transition of the business to the spouse, children, heirs or partners after their death.

The term "estate freeze" is commonly used to imply that a shareholder of a company freezes, at a given time, the value of the shares he owns while transferring these shares. The subsequent capital gain will be transferred to the new owner. One of the vehicles often used for this type of planning is the trust. Different strategies are possible with a spousal trust, an inter vivos trust, a protective trust, a testamentary trust, etc. Briefly, let us keep in mind that the trust results from an act whereby a person transfers his or her estate to another estate that he or she decides to build. This legal institution is recognized in civil law, common law and even tax law.

Of course, the will plays an important role in all planning and should be revised as necessary. As lawyers, we can draft wills and register them with the Will Register of the Barreau du Québec. However, the notarial will has benefits related to the "verification procedure". Therefore, when we work on estate planning, we work in collaboration with notaries in order to make sure that the wishes of our clients are recorded with the Will Register de la Chambre des notaires du Quebec.

At DUPUIS PAQUIN, we know how important it is for you to leave your loved ones a large hassle-free inheritance. We can help you to make it happen.

In this practice area, our team meets your needs in several ways, including:

  • Advice on Life Insurance in anticipation of succession;
  • Estate planning (will structure);
  • Setting up a protective trust;
  • Setting up a protective trust in a business environment;
  • Transferring assets to the spouse.