$1M Non-Registered Portfolio in Manitoba at Death in 2026: Capital Gains Inclusion Rate, Probate Fees, and What Heirs Actually Receive

Manitoba is the cheapest province in Canada to die in — if probate fees are the only thing you're counting. The province eliminated Court of King's Bench probate fees entirely in 2020. On a $1M estate, that's a $0 probate bill where Ontario would charge $14,250 and BC would charge $13,450.

But probate isn't what eats estates. Section 70(5) of the Income Tax Act — the deemed disposition rule — is federal, and it applies identically in Winnipeg as it does in Toronto. A $1M non-registered portfolio with $600K of embedded capital gains still triggers roughly $143,000 in income tax on the terminal return. The question isn't whether Manitoba saves you on probate. It's whether the account structure you chose while alive saves your heirs six figures at death.

The Scenario: Margaret, Age 74, Winnipeg

Margaret was a retired schoolteacher in Winnipeg who died in early 2026 at age 74. Her husband passed five years earlier. One adult daughter (Karen, age 48, also in Winnipeg) inherits everything through the will. No surviving spouse means no spousal rollover under section 70(6) of the ITA.

The family home qualifies for the principal residence exemption under section 40(2)(b) — $0 tax. The TFSA passes to Karen as named beneficiary — $0 tax, bypasses probate. The bank accounts have no capital gains component. The entire tax exposure sits in one place: the $1M non-registered portfolio.

Step 1: The Deemed Disposition — $600K Capital Gain

Under section 70(5) of the Income Tax Act, Margaret is treated as having sold the entire non-registered portfolio at fair market value immediately before death. The portfolio — a mix of Canadian equity ETFs, a handful of individual bank stocks, and a bond allocation — had an average adjusted cost base of $400,000.

Capital gain: $1,000,000 − $400,000 = $600,000.

The bonds and GICs in the portfolio contribute minimal capital gains (they're held near par), but any accrued interest not yet paid at the date of death is also included as income on the terminal return. The equities carry the bulk of the embedded gain — Canadian bank stocks bought in the early 2000s at a fraction of their current value.

Step 2: The 2026 Tiered Capital Gains Inclusion

The 2026 inclusion rate is not a flat 50%. Since the 2024 federal budget (effective June 25, 2024), capital gains for individuals are tiered:

• First $250,000 of annual capital gains: included at 50%
• Above $250,000: included at 66.67% (two-thirds)

Margaret's $600K gain crosses both tiers:

Step 3: The Tax Bill — ~$143,000

Margaret had minimal other income in her year of death (partial CPP and OAS for the months she was alive). The $358,345 of taxable capital gains income is by far the largest component of the terminal return.

At Manitoba's top combined federal + provincial marginal rate of approximately 50.40%(federal 33% + Manitoba 17.40%), and accounting for the graduated bracket structure on the lower tiers of income, the approximate income tax on the capital gains portion is:

Step 4: Manitoba Probate Fees — $0

Manitoba eliminated Court of King's Bench probate fees entirely in 2020. Regardless of estate size — $100K or $10M — the probate fee is $0.

This is the single largest advantage Manitoba estates have over Ontario (1.5% above $50K) and BC ($14 per $1,000 above $50K). On Margaret's estate:

Step 5: Executor and Legal Fees

Manitoba doesn't set executor fees by statute — they're determined by the will, agreement with beneficiaries, or court approval. Common benchmarks:

• Executor compensation: 2.5% to 5% of estate value, or $25,000 to $50,000 on Margaret's $1M portfolio (plus the house and other assets)
• Legal fees for probate and estate administration: $3,000 to $8,000 in Manitoba, depending on complexity
• Accounting fees (terminal return + T3): $2,000 to $5,000

For this worked example, we'll use a mid-range estimate: $28,000 to $58,000 in combined executor, legal, and accounting costs on the full estate. Karen (Margaret's daughter) is the named executor. If she waives executor fees — common when the sole heir is also the executor — the cost drops to the legal and accounting fees only ($5,000–$13,000).

What Karen Actually Receives: The Net Inheritance

The Spousal Rollover: What Changes If a Spouse Survives

Margaret's husband predeceased her, so no rollover was available. But if he had survived, the entire picture changes.

Under section 70(6) of the Income Tax Act, capital property left to a surviving spouse or common-law partner transfers at the deceased's adjusted cost base — not fair market value. On Margaret's $1M portfolio:

• The $600K capital gain is fully deferred — $0 tax on the terminal return
• The surviving spouse receives the portfolio at Margaret's $400K ACB
• The gain triggers only when the surviving spouse sells the securities or dies without a subsequent spouse

The TFSA Contrast: Same $1M, Radically Different Outcome

Here's where the planning differential becomes stark. What if Margaret had held $1M in her TFSA instead of a non-registered account?

This isn't hypothetical for illustrative purposes — with $7,000 of annual TFSA room since 2024 and cumulative room of $109,000 in 2026 (for someone eligible since 2009), a retiree who maximized contributions and invested aggressively could have a TFSA well into the six figures. Reaching $1M requires strong market returns, but the principle scales to whatever TFSA balance you actually hold.

Executor's Filing Checklist — Manitoba Specifics

Karen, as executor, faces these obligations:

1. Terminal T1 return: File by April 30, 2027 (or six months after the date of death — whichever is later). All deemed disposition gains and year-of-death income go here.
2. Probate application: File with Manitoba Court of King's Bench. Fee: $0. Manitoba is one of the simplest provinces for probate administration.
3. TFSA payout: Contact the financial institution directly. As named beneficiary, Karen receives the $85K TFSA payout outside the estate — no probate, no executor involvement required.
4. Clearance Certificate (TX19): Request from CRA before distributing estate assets. Without this, the executor is personally liable if CRA later assesses additional tax. Processing: 90–120 days.
5. T3 trust return: If the estate earns income after death (dividends, interest from the portfolio before securities are transferred or sold), a T3 return is required for each year the estate remains open.

For more on Manitoba intestacy rules and what happens when there's no will, see our Winnipeg estate intestacy guide.

Three Moves Margaret Could Have Made While Alive

The $143K tax bill wasn't inevitable. Here's what changes if Margaret had planned the non-registered portfolio with death in mind:

1. Maximize TFSA Contributions Every Year

Every dollar moved from non-registered to TFSA (by selling, contributing cash, and rebuying inside the TFSA) crystallizes the gain now at the current marginal rate — but all future growth and the remaining capital passes tax-free at death. With $7,000 of annual room, this is a decades-long play, not a last-minute fix. But a retiree who started in 2009 and contributed every year would have $109,000 of room — enough to shelter a meaningful portion of the portfolio from deemed disposition.

2. Systematic Capital Gains Harvesting

Rather than letting $600K of gains accumulate and hit the terminal return in a single year (pushing income into the top bracket), Margaret could have sold and rebalanced portions of the portfolio each year, realizing $30K–$50K of gains annually at a much lower marginal rate. A retired schoolteacher with CPP and OAS income in the $30K–$40K range has room in the lower brackets to absorb modest annual gains at effective rates of 20–30%, versus the ~40% blended rate on the terminal return.

3. Name Karen as Beneficiary on All Accounts

The TFSA already had Karen as named beneficiary — good. For the non-registered account, a beneficiary designation doesn't avoid the capital gains tax (deemed disposition still triggers), but it can bypass probate in some provinces. In Manitoba, with $0 probate, this is less critical — but it still speeds up the transfer. The family home passes through the will regardless.

How Manitoba Compares: Province-by-Province on This Estate

The deemed disposition tax is federal and identical everywhere. The differences are in probate fees and the provincial share of the income tax rate. For Margaret's $1M non-registered portfolio with $600K in gains:

The Bottom Line

Manitoba's $0 probate is a genuine advantage — but it saves your estate $22,500 vs. Ontario, while the deemed disposition on a $1M non-registered portfolio costs $143,000. The federal tax rule does six times the damage the provincial fee ever could. What actually moves the needle is account structure: every dollar held in a TFSA rather than a non-registered account at death passes to your heirs without deemed disposition, without probate, and without executor overhead.

On Margaret's estate, the difference between the non-registered portfolio and a TFSA of equal value is over $166,000 to heirs. That's not a planning nuance — it's a second home, a grandchild's education, or a decade of retirement income. The tools are simple: maximize TFSA contributions every year, harvest gains gradually while alive, and name beneficiaries on every account. The cost of not doing it only shows up on the terminal return — when it's too late to change.