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By David Hodges on March 31, 2015
Estimated reading time: 1 minute

Give money away and save on taxes

By David Hodges on March 31, 2015
Estimated reading time: 1 minute

TFSAs and setting up trusts for your kids and grandkids are two great ways to save on estate taxes

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(Blend Images/Jose Luis Pelaez Inc)

Even though Canadian politicians can’t agree on how to save the middle class, that doesn’t mean middle-class folks can’t save themselves from a huge tax bill on their estates. Once a last surviving spouse dies, for instance, a $500,000 RRSP or RRIF would be taxed as income on the person’s final tax return, meaning more than $200,000 would go to the tax man—and not to your family. A simple tactic for avoiding this is to slowly move money into TFSAs or regular taxable accounts to avoid a massive tax hit on your final return. You can also set up trusts for your children and grandchildren to average in taxable income at potentially lower marginal tax rates. That, or name your heirs as beneficiaries on accounts or give money to them while you’re alive to avoid probate fees. » 2015 Charity 100: A smarter way to give Tax savings: Up to 40% of your RRSPs, in the above example.

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