By Peter Weissman
June 26th, 2023
Estate litigation can be a complex and emotional process, often involving significant assets, costs, and stress. Unexpected tax issues can turn the relief of a negotiated settlement into further anguish.
Without proactive and timely tax advice during the litigation process, a good faith settlement may create an additional and undesired beneficiary, the CRA. These surprises are problematic for all parties involved and hard to change once the settlement is signed.
Consulting an experienced tax advisor during the estate litigation process (before any settlement is approved) will increase the chances of a successful settlement by providing guidance on tax planning strategies that can increase the size of the pie to be divided amongst the beneficiaries.
Enlarging the settlement pie can be the difference between closure and a lengthy or costly court battle.
But how do you increase the size of the pie when there is only so much to go around? You make sure the tax departments don’t eat too much!
There are many additional examples of tax problems that can arise when settling an estate litigation matter. Consulting with a tax advisor who is familiar with these issues during the estate litigation process is critical. With the guidance of a tax advisor, individuals can better understand tax implications, maximize tax savings, handle complex tax situations, avoid CRA penalties, and avoid inadvertently making certain settlement components taxable.
Peter Weissman, Cadesky Tax, Toronto
