Portfolio Confidential - November/December 2025

I am a 46-year-old widow. My late husband’s accounts were recently transferred to me, and I would like your opinion as to what I should do with the holdings. My goal is to maximize growth over the long term for the benefit of my two young children. I will have no need to draw income from these sources. My husband’s TFSA and RRSP are in an RBC Monthly Income Bond Fund - Series A and RBC Select Balanced Portfolio - Series A.

I would also like your advice as to how best to let his advisor know that I no longer wish to use him. I am looking forward to running my own portfolio.

The MER (management expense ratio) for the RBC Monthly Income Bond Fund - Series A is a whopping 1.09%. In my view this fee is quite outrageous for a bond fund. The MER for the RBC Select Balanced Portfolio - Series A is 1.94% - also on the extremely high side. Given your investment objective of maximizing growth, you would be far better off investing in a low fee equity ETF, which you can easily do on your own.

In terms of communicating with your advisor, it is best to be as definitive as possible otherwise he will do his best to try to talk you into a meeting and sell you some other products. I recommend sending a very direct email thanking him for his service and letting him know that you have made your decision to manage your own portfolio. Don’t give him a meeting!

I have been investing for about 40 years (aged 76). Right now, I have a taxable account worth about $2 million and another 500K in GICs. My husband and I are revising our wills. We have two adult sons, over 40, both unmarried and no grandchildren. Our condo in downtown Toronto, worth about a million, is mortgage free. 

When looking at the possible tax we would owe to CRA upon death, I was horrified by the numbers! It would be helpful to get advice on reducing the unrealized capital gains ($722,400):  3 mutual funds (one with a gain of $124,000) and 3 ETFs each with gains over $35,000.

I reached out to Shaun Doody who is a Tax and Wills/Estates Lawyer with Fogler Rubinoff for his advice on this topic:

“The reader in this case is commendably forward-looking, not just for having accumulated a sizeable amount of retirement savings, but also for trying to ensure that these savings are handled in as tax-advantageous a manner as possible on her death. Bonus points for doing it at a young enough age that there is still plenty of time to put strategies in place.

As a first comment, for people that may not be aware, the tax that the reader mentions owing to the CRA (being the Canada Revenue Agency) on death would be those taxes resulting from what is called the "deemed disposition" of her assets on death (probate taxes are also a concern on death, but are outside of the scope of this article.) Essentially, when someone dies, they are taxed as if they sold everything they owned, immediately before death, for the fair market value of all such assets at that time. If anything they owned had gone up in value while they owned it, then this deemed disposition would result in deemed capital gains, which would be taxable in their terminal (i.e. final) tax return. These taxes are particularly punitive in that, while a taxpayer may not have been in the highest tax bracket (being 53.53% in Ontario in 2025 for income over $253,414) during their lifetime, the deemed disposition of a large non-registered investment portfolio can easily put them in the top tax bracket in their year of death.

What, then, can be done about this? Well, I should first mention one of the main ways to defer taxes on death: leaving assets to a spouse, common-law partner, or to a properly-structured trust for the benefit of such an individual. Where property is left to such an individual (or trust), the property is not deemed to have been disposed of at fair market value in the terminal return of the deceased, but is instead deemed to pass on what is called a "rollover" basis. This effectively means that the tax on any accrued gains on the assets is deferred until the death of the spouse/common-law partner. As mentioned, though, this is only a deferral; at some point the taxes will have to be paid.

Is there a way to avoid taxes entirely? While the answer is, for the most part, "no", there is one way: charitable contributions. Where valuable property is donated to a registered charity in Canada (either during lifetime or in a will), the donor is entitled to a tax credit for the value of the donated property (the amount of the credit depends on the amount donated and the donor's marginal tax rate, but in many cases it's possible to receive a credit at the highest marginal rate). In addition, there is a further benefit when publicly-traded securities (i.e. the kind found in many investment portfolios) are donated. Normally, when assets are donated, the donor is deemed to have disposed of the asset for its fair market value, which can lead to capital gains taxes (as an example, if I donate property with a cost base of $100 and a fair market value of $200, I will receive a charitable tax credit for the $200 donation, but I will also be taxed as if I had incurred a $100 capital gain, which is a bit of a kick in the pants for someone trying to do a nice thing). If the donated property is publicly-traded securities, though (and I should note that there are specific rules for such property, so you should consult with your accountant before doing anything), then you would still receive the full charitable tax credit, but you also avoid the deemed capital gain. As such, donating publicly-traded securities with a high accrued capital gain can be a double whammy in terms of tax reduction.

Outside of charitable donations, though, there aren't a lot of good ways to completely avoid paying taxes on accrued capital gains. Some options to consider are:

If the taxpayer is not already in the highest tax bracket, they could gradually realize the gains over a number of years in order to maximize the availability of the lower tax brackets. This doesn't avoid the gain entirely, but it may help it be taxed at a lower rate (versus having everything taxed at once in a terminal return). This can be coupled with a strategy of selling assets with accumulated capital losses in order to offset some of the gains.

If assets can be sold, and the proceeds paid over a number of years (up to five), then the tax can also be spread out over that time (this is largely the same strategy as above, except that the assets are sold up front)

When taxpayers sell certain types of assets (such as qualified farm or fishing property, or shares of certain small businesses), they may be able to avoid paying tax on a certain portion of the gain (which can be up to $1.25M for a taxpayer's lifetime). Your accountant should be able to let you know whether you own such property (sadly, unless you have started a small business or are a farmer/fisher, you likely would not)

You can implement what is known as an "estate freeze." While the details of this type of planning are beyond the scope of this article, the Coles-notes version is that an estate freeze ensures that any future growth in the value of an asset would not be taxed in your hands at death (this doesn't avoid taxes on the current accrued gain of the asset, but avoiding taxes on future growth can be very helpful.) This is another strategy to discuss in more detail with your accountant.

Do you have questions about your own investment portfolio?

Consider calling The Rich Thinking® Financial Advice Hotline. This will be a win-win: you get a free 30-minute confidential Zoom chat offering an independent, unbiased perspective on your financial situation with no sales pitch! In exchange. I get to use the anonymized data that will come from these conversations to make my Rich Thinking research even better.

Email me to book your Zoom discussion:

barbara@barbarastewart.ca