A will and estate plan organizes your affairs and manages your assets tax-efficiently in the event of incapacity or death. Half of Canadians (51%) say they have no will in place, while only a third (35%) say they have one that’s up to date1. It may be uncomfortable to think about, but after you’re gone, you won’t have a say in some very important matters unless you communicate your wishes ahead of time.
Protect and care for your loved ones
A will and estate plan formalizes your intentions for leaving an inheritance and prevents anyone else from making a claim against your estate or challenging your beneficiaries. It also helps to ensure you earmark enough money for expenses related to your passing, like funeral costs, so your loved ones aren’t burdened.
If you have minor children, it’s vital to specify who will care for them in the event of your death. Besides making your wishes about guardianship known, this can help avoid custody disputes and family strife.
If you’re the sole income earner in your household, you also need to plan for the care and financial well-being of your dependents should you die unexpectedly, a new reality as people have children later in life.
Without a will, your property will be distributed to your spouse and blood relatives according to provincial law. If you have no spouse or blood relatives, your estate will go to the provincial government. This will be the case even if, for example, you have a long-time companion or support a charity. If that’s not how you want your estate handled, you need to create a will.
Save on tax
When you die, you’re considered to have sold most of your assets for tax purposes at their fair market value. You can try to reduce unnecessary delays in settling your estate by naming beneficiaries on your investments. This allows the money to bypass the estate process and be paid directly to your heirs.
Another common way to reduce estate costs is through joint ownership of assets like your principal residence and bank accounts. Jointly held assets go to the surviving owner and don’t form part of the estate. While a powerful tool for saving in probate fees and deferring taxes, jointly holding assets can be problematic, so it’s important to proceed carefully and understand the ramifications, another reason why planning is essential.
Start now
Proper planning can help make sure your wishes are carried out, that your family is looked after and that your assets are distributed in an orderly way that will minimize the tax burden on your beneficiaries and your estate. If you have no will and estate plan or it needs to be updated, don’t put it off any longer as there can be major consequences for waiting until it’s too late.
For further guidance on estate matters, including establishing or updating your will, call our office today.
- “What ‘will’ happen with your assets? Half of Canadian adults say they don’t have a last will and testament,” Angus Reid Institute, January 23, 2018 (press release).
Prior to implementing any strategies contained in this article, individuals should consult with a qualified tax advisor, accountant, legal professional, financial advisor or other professional to discuss the implications specific to their situation. Estate law, including Wills, Powers of Attorney and probate fees, vary and are governed by each provinces and/or territories. Please review provincial laws based on where you reside.