Taxation of Trusts, Estates, and Wealth Transfers

What should I understand about how trusts, estates, and estate freezes affect who is taxed when wealth is transferred?

Taxation of Trusts, Estates, and Wealth Transfer (formerly Foundations of Tax Module 2) explores how Canadian tax responsibilities shift when wealth moves through an estate, trust, family business, or estate-freeze structure. It examines tax at death, trust and estate filing obligations, trust residency, the practical demands placed on executors and heirs, and the use of an estate freeze to preserve an owner’s current value while shifting future growth to family members or a family trust. It also considers the limits that shape these strategies, including Alternative Minimum Tax, attribution rules, and TOSI, helping learners move from seeing each rule in isolation to asking more informed questions about tax, control, succession, family roles, and implementation.

What You’ll Be Able to Do on the Other Side

• Separate the tax roles and responsibilities of an individual, estate, trust, beneficiary, executor, and trustee.
• Assess the main tax and filing issues that can arise at death, including deemed dispositions, terminal returns, T3 returns, GRE status, and trust distributions.
• Analyze how an estate freeze changes ownership, preserves an owner’s current value, and shifts future growth to family members or a family trust.
• Evaluate the financial, control, succession, and family considerations in an estate-freeze proposal before deciding what questions to raise with advisors.
• Identify when trust residency, AMT, attribution rules, or TOSI may limit or complicate a planning strategy.

The Experience

This self-paced module combines concise explanations, process diagrams, mini cases, and reflection prompts. Learners compare estates and testamentary trusts, follow the tax sequence at death, examine the Chen family’s estate-administration challenges, and use the Garron case to distinguish formal trustee location from real decision-making authority. A substantial case study follows the Reynolds family and Minimum Effort Productions before and after an estate freeze.

Learners interpret ownership diagrams, consider whether the family should proceed, record questions for an advisor, and complete a homework exercise weighing financial and non-financial opportunities. Worked examples on AMT and income splitting then help learners connect the planning strategy to the tax rules that may constrain it.

Featured Resources:

• Don't Leave a Mess Chapter 6, "Taxes: Truth or Consequences" by Sandra Pollack
• "Supreme Court of Canada Renders Decision on Trust Residency" by Stikeman Elliot
• Fundy Settlement vs. Canada