Estate Tax Insurance Calculator Canada 2026

Frequently asked questions

Does Canada have an estate tax?

No, Canada does not levy a separate estate tax or inheritance tax. However, the CRA triggers a deemed disposition at death, treating all capital property as sold at fair market value. The resulting capital gains are taxed on the deceased's final income tax return. Combined with the full income inclusion of RRSP/RRIF balances, the effective tax burden on an estate can be very significant.

What is the spousal rollover and how does it help?

When assets are left to a surviving spouse or common-law partner, they can transfer at the deceased's adjusted cost base rather than fair market value. This defers the capital gains tax until the surviving spouse sells the asset or passes away. RRSP and RRIF balances can also roll over tax-free to the surviving spouse's own registered accounts. The rollover does not eliminate the tax. It postpones it to the second death.

How much are probate fees in my province?

Probate fees vary widely. Ontario charges approximately 1.5% on estate assets above $50,000, British Columbia between 0.6% and 1.4% on a graduated scale, Alberta a flat maximum of $525, and Quebec charges no probate fees for notarial wills. Assets with named beneficiaries (such as life insurance, TFSAs, and RRSPs with a designated beneficiary) bypass probate and are not subject to these fees.

Why is life insurance used for estate planning?

Life insurance provides immediate, tax-free liquidity at the exact moment it is needed, when someone dies and the tax bill comes due. Without insurance, the estate may need to sell illiquid assets like real estate or a business under time pressure, often at a discount. A permanent life insurance policy guarantees a known death benefit that can be precisely matched to the estimated estate tax liability, ensuring heirs receive the intended assets intact.

Should the life insurance policy be owned personally or by a corporation?

Personal ownership is simpler and the death benefit goes directly to named beneficiaries tax-free. Corporate ownership allows premiums to be paid with pre-tax corporate dollars, and the death benefit is credited to the capital dividend account (CDA), enabling tax-free distribution to shareholders, especially beneficial for business owners with significant retained earnings. A tax advisor should evaluate the specific situation to determine the optimal structure.

How does this calculator work?

Enter the fair market value and adjusted cost base of your major assets, your RRSP/RRIF balances, your province of residence, and any existing life insurance coverage. The calculator estimates the deemed disposition tax on each asset class and the income tax on registered account balances, then compares the total liability against your coverage to show any shortfall. Results account for the spousal rollover. Eligible assets can transfer to a surviving spouse at cost base, deferring the tax until the second death.