As of January 1, 2020 a tax-rate change took effect in Ontario with respect to the Estate Administration Tax (EAT), formerly known as probate fees.  Even with this reduction, thousands of dollars worth of taxes can be generated on an estate, depending on the mix and value of assets owned by the deceased at the time of death.

A structured settlement annuity is a product that is often designed with a built-in guarantee period for the benefit of the claimant’s estate or named secondary payee (“beneficiary”).  If a beneficiary is named, the present value of the guaranteed payments at the time of death will not be subject to the EAT.

For example, an estate valued at $250,000.00 (assuming no EAT-exempt assets are included) would result in a tax bill of $3,000.00.  The assets of this estate cannot be released until this tax is paid, which is the responsibility of the estate representative.

A structured settlement containing guaranteed payments with a value of $250,000.00 would give rise to no tax of any kind.  Payments would continue to flow to the beneficiary, tax-free, well before the assets of an estate are released.

This is another example of how a structured settlement can provide protection and stability for your family.

ABOUT BRADLEY CANN

Bradley’s technical expertise and excellent attention to detail play an important role in maintaining McKellar’s reputation for providing detailed and accurate figures to our clients. To learn more about Bradley, check out his bio here, or contact him directly here.