There are two things in life you can count on — death and taxes. You can also count on dreading both of them, especially when they join forces. You know the effect that kryptonite has on Superman? The death-and-taxes duo is known to wreak similar injury upon even the most carefully guarded personal finances.

Fortunately, there are some strategies that you can use to keep as much of your estate as possible out of Canada Customs and Revenue Agency coffers. Because these strategies can vary depending on the size of your estate, what I’ve assembled here is, by necessity, not a comprehensive guide, but it is a good start. For ideas that suit your specific situation, consult with your own accountant or lawyer.

Let’s start by imagining a typical situation for a middle-class Canadian. Let’s say that you leave behind a bank account worth $5,000; various investments worth $50,000; an RRSP or RRIF of $200,000; and a $100,000 life insurance policy payout. What can you do to protect your assets from taxation?

First the bad news. Your investments outside your RRSP will get hammered, because there’s nothing you can do to shelter them. (Selling the investments before you die won’t work, because you’d just end up paying the inevitable taxes sooner.) For tax purposes, investments are considered “sold” upon your death and your executor must report the capital gains, if any, on your final tax return. Just as in life, 50% of the gains are subject to tax at your marginal tax rate. That means if your investments have grown by $10,000 at the time of your death, and you’re in the 47% bracket, your estate must pay out $2,350 in capital gains tax (50% of $10,000 is $5,000, x 47% = $2,350).

Now for the good news. You don’t need to stress about the bank account or life insurance policy you leave behind, since neither is taxable. And if you’re married, it’s easy to ensure that your registered retirement savings are safe, too, at least for the time being. Simply name your spouse as the beneficiary, either right in the RRSP or RRIF documents, or in your will. That way, taxes remain deferred until your spouse decides to cash out, and even then only the amounts withdrawn each year are taxed, year by year.

If you don’t designate a beneficiary, however, the situation isn’t nearly as pretty. The total value of your RRSP or RRIF will be taxed as income, in one giant lump sum. Translation: prepare to lose $94,000 off the value of your retirement savings in a single shot, assuming you’re in the 47% tax bracket.

Protecting your RRSP or RRIF isn’t the only reason to have a will drawn up. With the help of a good lawyer, a will can be a powerful tax-saving tool. Again, the possibilities depend on the size of your estate and who your beneficiaries are, so talk to a professional when you’re ready. For everyone, having a will lets you control how your assets are divvied up, and if you don’t have one, your provincial or territorial government gets to decide who inherits what. That’s a frightening thought, especially for people who want to ensure their dependents and other loved ones are cared for after they’re gone.

Once you’ve taken these steps, it’s up to your executor — the person you appoint to look after your finances when you die — to keep the taxes to a minimum. Since you can’t coach your executor from beyond the grave, sit down and have a serious chat now, using the tips I’ve laid out below as crib notes. But be nice, OK? Being an executor is hard work, and the person you choose may have to file three separate tax returns on your behalf.

The first of these is called the “final return,” for obvious reasons. In format, it’s no different from your regular annual tax return, except you’re not the one stuck doing it. The CCRA must receive your final return by April 30 or six months after the date of death, whichever comes later.

There are several opportunities for tax savings on the final return — provided your executor knows about them. For starters, many people assume that because you cannot claim a net capital loss against other income in life, you can’t in death, either — a common mistake. In fact, on a final return you can deduct net capital losses, minus any capital gains deductions you claimed in the past, against other income. This figure, which should be recorded as a negative amount on line 127 of your return, will reduce your taxable income and, in turn, the amount of taxes you owe.

Your tax bill will be even smaller if the second of your posthumous tax returns, the T3 “estate return” shows a capital loss in the first year after your death. Normally, an executor will sell the assets and investments in your estate to pay funeral expenses, cover taxes on the final return, and distribute cash amounts to your beneficiaries. The sale will result in a capital gain or loss. In death, gains are taxed the same as they are in life. If you have a loss, however, it’s time to break out the boneyard bubbly and celebrate, because although the loss cannot be used to reduce any income earned by the estate (such as interest payments, rental income, etc.), it can be transferred to your final return, where it will reduce your overall income and taxes.

The third tax return that your executor may file on your behalf is called, curiously, a “rights and things” return. Again, it’s the same as a normal annual tax return, except your executor writes “Rights and Things” on the front. This is the place where unused vacation leave paid after your death as well as matured, uncashed bond coupons, Canada Pension Plan and Old Age Security payments for the month of your death, and declared but unpaid dividends are reported. If these amounts are small, they may simply be reported on your final return. However, filing return No. 3 is often worth the trouble, because it presents your estate with an opportunity to split income by using the graduated tax rates twice. Here’s what I mean. The more you earn, the more you pay — that’s the dread of our graduated tax system which taxes higher incomes at progressively higher rates. If your “rights and things” income is $3,000, and the income is filed on a separate “Rights and Things” return, it will be taxed at the lowest rate (about 25%, or $750 in this case). If you had left it on the final return, it would have been taxed at your 47% rate, or $1,410, assuming that’s your marginal tax rate. That’s not a bad saving to leave your heirs.