Estate planning means not leaving your money to the government. Here, ways to make sure the taxman gets less.

Face it: when you die, the wealth accumulated over a lifetime will be exposed to taxes. Instead of leaving it all to your family, you could be paying a lot to the Canada Revenue Agency (CRA). And that could deprive your beneficiaries of tens of thousands of dollars.

"Everything is up for grabs," says Jeanette Brox, a Toronto-based certified financial planner (CFP) and senior financial consultant with Investors Group. And "everything" means registered and non-registered accounts, recreational property and an interest in a business. "No one wants to make the CRA a beneficiary of their estate," Brox adds. "But fortunately there are ways to minimize or even obliterate the tax bite."

Here, according to Brox and Peter Andreana, a CFP and business owner specialist with the Burlington, Ont.-based Continuum II Inc., are ways to make sure the taxman gets less.

insurancePurchase life insurance, whose proceeds are tax-free on death. "This is one approach if you have a sizeable estate," says Brox, recalling how a client bought life insurance because she did not want her daughters to face a large tax bill – her own parents had left her a tax bill in the hundreds of thousands. Insurance is not cheap, however. Whole life, or so-called permanent, insurance with a death benefit of $150,000 might cost about $800 a month for a 75-year-old man in good health. One solution is to split the cost between the insured and grown children. "If children stand to benefit, then maybe they should pay part of the premium – or even all of it," says Brox. Of course, she adds, one's grown children have to agree to this approach.

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