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In this case, absent any planning, the tax bill on William's final tax return will be about $1,800,000. Who's going to pay the taxes? These will be paid out of the residue of the estate, before Wendy and Warren receive anything. So, the $2,800,000 of residue is reduced to just $1-million ($2,800,000 less $1,800,000 in taxes), leaving just $500,000 for each of Wendy and Warren. Wendy and Warren are not happy about how much they're due to receive. They see that Wayne is inheriting $7-million of value. They don't begrudge Wayne inheriting the business, since he's the only one working in the business and has been largely responsible for its success over the past 10 years. But there's discontent that he's inheriting the full value of the business for himself. It's also worth noting that this family lives in Ontario, and under the Family Law Act, Jane is entitled to more of William's estate than the $1-million he left her. You see, a death is treated much like a marriage breakdown, which results in half of the net family property going to the spouse.

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