Reducing Revenue Canada's Share of Your Estate
  When you die, Revenue Canada will tax your estate as if you had sold all your capital property — stocks, business and real estate, excluding your family home. As a result, your estate may end up with such a big tax bill that some valued assets may have to be sold to pay it.

  Careful planning will help reduce these taxes. Here are some things to bear in mind:

Principal Residence
Your primary residence is exempt from capital gains tax and can be transferred to any beneficiary tax free. It is usually better to hold your principal residence jointly with your spouse so it will bypass your estate and go directly to him or her, avoiding probate fees.
 

Spousal Transfer
If you are married, name your spouse as beneficiary of your RRSPs and RRIFs. This way, the money can be transferred to your survivor’s plan and tax will be deferred until your spouse either withdraws the money or dies. (If you die with unused RRSP contribution room, your executor can make a final contribution to your RRSP on your behalf before it is rolled over.)

Alternatively, you can name a minor child or grandchild who is financially dependent on you as the beneficiary of your registered savings plan. Your executor can use the money to buy an annuity for the child until he or she reaches 18, thereby spreading the tax over several years.

If you leave assets in an RRSP or RRIF to a chld or grandchild who was financially dependent on you at the time of your death and who is mentally or physically disabled, the assets can be trasferred tax-free to an RRSP in their name. In this case, there is no age restriction.

Non-registered assets can be rolled over to your spouse at no cost and any capital gains tax deferred until your spouse dies.
 

Estate Freezing
Estate freezing fixes the value of an asset at its present level so that future capital gains are taxed in the hands of your heirs. It is often used when a person owns a business that is growing and wants his or her children to take it over. An estate freeze can be done by issuing shares, setting up a holding company, or creating a family trust.
 

Life Insurance
Life insurance benefits are not taxable. Often people will purchase life insurance to offset the taxes that will be payable on their estate, thus preserving the value of the assets for their heirs.
 

Charitable Gifts and Bequests

You can receive a tax credit for charitable donations made through your will of up to 100 per cent of your net income. The credit is claimed on your final tax return.
 

Trusts
Trusts can be a tax-effective way to provide for your heirs. When you transfer assets to a trust, the income is taxed in the hands of the trust or its beneficiary. For example, living trusts, or trusts that come into effect while you are alive, let you split income with family members who are in a lower tax bracket.
Probate Fees
   When it comes to settling a person's estate, banks, trust companies, investment dealers, and other financial institutions can be sticky. They want to make sure a will is valid and legal before they transfer any assets. As a result, they often ask for probate, or court approval, of your will.

  To obtain a grant of probate, your executor will submit the will, a list of your assets — including their current market value — and the probate application to the provincial court. This process can take several weeks.

  In addition to being a lengthy process, probate will be costly for your heirs. Ontario significantly boosted its probate fees in 1992, and it is likely that other provinces will be tempted to follow suit.

  If an estate is small, financial institutions may be willing to forego the probate process if the will is notarized and the estate puts up a guarantee.

Current probate fee schedule
Newfoundland $50 for first $1,000, $4 per $1,000 thereafter. No maximum
 
 
Nova Scotia $800 for first $200,000, $5 per $1,000 thereafter. No maximum
 
 
PEI Progressive rates: $50 for first $10,000, increasing to $400 for estates of $100,000, and $4 per $1,000 thereafter. No maximum

 
New Brunswick $5 per $1,000. No maximum

 
Quebec No probate fee. $45 for "English Form" wills

 
Ontario $5 per $1,000 for first $50,000, $15 per $1,000 thereafter. No maximum

 
Manitoba $20 for first $5,000, $5 per $1,000 thereafter. No maximum

 
Saskatchewan $7 per $1,000. No maximum

 
Alberta Progressive rates: $25 for first $10,000, increasing to maximum of $6,000 for estates in excess of $1,000,000
BC estates of $10,000 to $25,000 = $200,
estates of $25,000 to $50,000 = $6 for every $1,000 (full or part),
estates over $50,000 = $14 for every $1,000 (full or part)

Strategies for Minimizing Probate Fees
  There are a number of methods you can use to decrease probate fees your estate will be hit with. Most involve ways to pass your assets directly to others without having them first included in your estate, since probate fees are assessed on the value of your estate.

  Probate fees can be reduced by making your spouse the beneficiary of your RRSP or RRIF; naming beneficiaries of life insurance policies; holding certain assets jointly; and setting up trusts, thus bypassing the estate. Here's a look at the specifics.

Life Insurance Policies
  Often people make their estate beneficiary of their insurance policy, but doing so leaves the proceeds subject to probate fees. It is better to name an adult person beneficiary so the proceeds do not pass through your estate but go directly to that person.

Registered Plans
  If your spouse is named as beneficiary of your RRSP or RRIF, the proceeds can be rolled over to them directly without going through probate.

Joint Accounts
  Hold your bank accounts and investment portfolios jointly with your spouse or other beneficiary so assets will automatically pass to the survivor. Officially, the correct language to look for is "Joint tenancy with right of survivorship."

Joint Tenancy
  If you own your home jointly, it will pass directly to the surviving partner without probate.

Trusts
  Consider transferring assets to a trust while you are alive. Assets held in a living trust are not included in your estate because they are no longer your property.

  Assets bequeathed to your spouse will be subject to probate fees when he or she dies. To avoid paying probate fees twice, you may want to set up a spousal trust in your will so the assets pass directly to your children when your spouse dies.