09/02/2025
According to this Bradford Today article, a family saved $715,000 in an RRSP, intending to leave it to their children. Instead, Ottawa claimed $659,126 in taxes upon death:
• $382,000 from the RRSP itself
• $277,000 from a “phantom” capital gains tax on their cottage
Nearly half a lifetime of hard work vanished — not to the kids, but to the government.
This is the reality of Canada’s death tax system:
• Capital gains are taxed even if the asset is never sold. That is a major problem. If you sell, then fine, you have the money from the sale to pay the tax. No sale, no money.
• Families are often forced to sell cottages, farms, or businesses just to pay the bill.
• Generational wealth is wiped out, often before heirs even inherit it.
It doesn't have to be this way, and it doesn't only happen because of a cottage. But if you only manage your wealth through a bank, this is exactly where you could end up.
