A Starter Guide to Estate Planning

| Planning for Myself or a Loved One

mains seniors signant des papiers

Plan ahead to ensure that your family will be provided for

Have you thought about what will happen to your property and other assets when you die? Few people like to think about their own mortality, let alone discuss it with others. However, not doing any estate planning means losing control over your hard-earned belongings, risking your family’s financial well-being, and missing the opportunity to minimize taxes.

“Estate planning is the process of managing what will happen to your assets after you pass away,” says Harpreet Wadehra, CPA, CA, principal at Wadehra PC , an accounting firm in Brampton, Ontario. “There’s a lot to think about. Death and taxes are two things we can’t avoid, but estate planning reduces the amount of tax your estate will have to pay.”

A properly structured estate plan with a valid will makes your wishes clear, which helps to avoid uncertainty, confusion and family conflicts during an already difficult time. Having an estate plan also minimizes delays in transitioning your assets to your heirs and beneficiaries. If you die “intestate” (without a will), your province decides how to distribute your assets. This requires appointing an administrator to fill the role of executor of your estate. If you have children under 19, their inheritance is held by a bonded guardian or public trustee – which also requires finding an administrator, leading to further delays and expenses.

Estate planning provides peace of mind and helps you ensure that your partner, children and other dependents will be taken care of in a timely manner.

What’s involved in estate planning?

  • When you meet with an accountant or a financial advisor to make an estate plan, he or she will ask for this information:
  • A list of your assets, including properties (primary residence, rental properties, cottages, etc., including jointly owned properties), family businesses, investments (stocks, bonds, RRSP, TFSA, RRIF, etc.), insurance policies, bank accounts, trusts, pension plans and personal property (vehicles, jewellery, art, etc.).
  • A list of your liabilities, including mortgages, credit card debt, loans, investment-related debt, financial support for family members, etc.
  • Objectives for your estate plan, such as minimizing taxes (including income taxes, capital gains taxes and probate fees), naming your beneficiaries, business succession plans, creating trusts, making charitable donations, paying for a grandchild’s education, or pre-planning your funeral.
  • Important documents, including your will, powers of attorney, insurance policies, real estate deeds, contact information for your beneficiaries and the executor of your will, etc. (You don’t need to provide all of these during an estate planning meeting, but you should know where to find them.) If you don’t yet have a will or powers of attorney, talk to your financial professional or lawyer about creating these and other important advance directives.
  • Who will be your estate representative, the person responsible for administering your estate and carrying out instructions in your will after you pass away, including funeral arrangements, notifying your beneficiaries, settling your debts with money you’re your estate, completing your final tax return and other tasks.
  • Planning to meet your objectives

Your financial professional can help you understand the various elements of estate planning, estimate fees and taxes (which can be significant), and achieve your estate planning objectives in the most cost-effective way.

For example, your advisor may recommend changing the ownership structure of certain properties to minimize the capital gains taxes that are triggered upon your death. They may also advise distributing some of your assets to your beneficiaries while you’re still alive (for example, giving gifts of money to grandchildren) to reduce the overall tax burden when you die.

An estate plan is not set in stone. You can update it as needed – for example, when there is a marriage or divorce in your family, or if your assets or liabilities change. “It’s a good idea to sit down with your accountant or financial advisor at least once a year and see how you can reduce taxes in the future,” says Harpreet, who helps many of her senior clients with estate planning. “Don’t be afraid to ask questions. We need to know what you’re thinking so we can help you plan for it.”

Additional resources

Financial Consumer Agency of Canada: