Why Estate Planning Matters More Than You Think
An estate plan can help spare your heirs from paying out-of-pocket expenses to settle the estate, maximize their inheritance and ensure your voice is heard.
Godfrey Yu
Wealth Planner and Relationship Manager
Estate planning can be difficult and emotional, leading many to avoid the subject altogether. According to a 2023 RBC Insurance survey, one in three (34%) Canadians say their spouse/partner is not familiar with the details of their estate plan and, subsequently, what happens to their assets after they’re gone. This can create challenges when the time comes to act on those wishes, leaving family members unprepared for the future.
Having a will can certainly help, but when it comes to wealth transfer, it’s more than a matter of giving or receiving money. Before your hard-earned assets can be used by the next generation—or beyond—you should consider ways to reduce potential probate fees and taxes and implement protection measures. An estate plan can help spare your heirs from paying out-of-pocket expenses to settle your estate, maximize their inheritance and ensure your voice is heard.
Minimizing the Estate
In Canada, we have “probate fees.” Essentially, this is an administration tax calculated on the total value of a deceased person’s estate. Then, there are various other taxes that can be levied after death—all of which can start to add up. Here are five strategies often used to reduce those expenses:
Joint accounts: People who own assets together, like a home, for example, may have rights of survivorship, which means the property is automatically distributed.
Name beneficiaries: By having beneficiaries for insurance policies, pension plans and registered savings accounts—such as tax-free savings accounts (TFSAs) or registered retirement savings plans (RRSPs)—you can have some funds go directly to your loved ones rather than with the estate.
Multiple wills: While each circumstance will differ, business or property owners might consider a secondary will to potentially bypass probate and fees.
Gifting while living: Also known as a living inheritance, giving gifts to family members while living can reduce your estate and ensure your wishes are followed. A good example of this is providing money to grandchildren for a down payment.
Charitable donations: Certain charitable gifts may qualify for a tax credit.
Watch our recent JCIC Speaker Series with Lori Isaj of WeirFoulds LLP, Wills & Estates: Getting Started, to learn more.
Sharing Intentions and Protecting Assets
Creating a will might seem simple, as you don’t technically need to visit a lawyer or notary to create this type of legal document. However, having a professional draft up your will can ensure it’s legally binding, reduces costs and avoids estate administration issues. Of course, it can also help you navigate the complexities of provincial or territorial law. This can be especially useful if you have a blended family, are separated, divorced, or co-own property.
You Might Also Like: How Individual Pension Plans Offer Up to 65% More Tax Savings Than RRSPs
For instance, in Ontario, the Succession Law Reform Act is very different if you die with or without a will, and has the potential to benefit the wrong people. Say, for example, you are in a common-law relationship. In the case you pass without leaving a will, your surviving partner would not be treated the same as a married spouse, which can create costly legal challenges. Bringing your family into the conversation early can help avoid any unwelcome surprises.
Two strategies to protect your assets include:
Wills: Gives you control over your estate after you die.
Trusts: Setting up a living, testamentary, or family trust allows you to control the timing and distribution of assets. It can also protect against creditors, lawsuits and marriage breakdown of your intended recipient.
Where and When Should You Begin?
It’s never too early to start estate planning—there’s much to do. From appointing an executor (which is a big job, after all) to deciding what is fair, there is a lot to be discussed. As you seek ways to secure your family’s financial future, we at JCIC can help protect and manage your wealth.
NEWSLETTER
Disclosure:
Although we obtain information contained in our newsletter from sources we believe to be reliable, we cannot guarantee its accuracy. The opinions expressed in the newsletter are those of JCIC Asset Management, its editors and contributors, and may change without notice. Any views or opinions expressed in the newsletter may not reflect those of the firm as a whole. The information in our newsletter may become outdated and we have no obligation to update it. The information in our newsletter is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is provided for information purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor or a group of investors. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. We strongly advise you to discuss your investment options with your Relationship Manager prior to making any investments, including whether any investment is suitable for your specific needs.
The information provided in our newsletter is private, privileged, and confidential information, licensed for your sole individual use as a subscriber. JCIC Asset Management reserves all rights to the content of this newsletter.