Should you sell stocks you inherit? + MORE Sep 12th

Here’s a round-up of news for Canadian investors this week.

Groupe Dynamite

Roots

Transat A.T. Inc.

Empire Co. Ltd.

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As the oldest Gen Xers start reaching the big 6-0, many of them are doing so while caring for aging parents—helping with financial, health-care, and housing decisions, alongside resetting the wifi and picking up groceries. At the same time, a growing share of these middle-aged life coaches don’t have kids of their own, which leads to the question: who’s going to help them with these things when their turn comes around?

In fact, the proportion of Canadian women without biological children has been rising steadily, up to 17.4% of those over 50 in 2022. And family sizes are smaller than they used to be, which lowers the chances that the kids people do have will be nearby, available, and capable of helping. “Many people assume their adult children will step in to help with things like tech issues, downsizing or health care,” says Kara Day, a financial planner in Vancouver. “If you don’t have kids to lean on, retirement looks different, and it requires more intentional planning…

An inheritance can be comprised of cash, securities, real estate, or other assets. When you inherit securities like stocks, there are income tax and strategic considerations. Here are some that you should keep in mind. 

How are stocks taxed when you inherit them? 

When a spouse or common law partner is a beneficiary, assets can be transferred to them on a tax deferred basis. So, for this section, we will assume a non-spouse beneficiary. 

For non-spouse beneficiaries, inheriting stocks usually triggers tax consequences at the estate level, not for the individual. The estate settles any taxes owed before distributing the after-tax proceeds to the heirs.

A registered account like a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) is fully taxable based on the account value. The market value of the account on the date of death is considered income to the deceased. The tax is payable on their final tax return. Income or growth after that is taxable to the beneficiary:

If the estate is named as beneficiary, it will pay the incremental tax…