Estate planning strategies

We all know the importance of regular health check-ups, but when was the last time you took a look at your Will or estate plan?

Is it overdue for a check-up?

Most legal professionals recommend reviewing your plan every 3 to 5 years, and any time you experience a major life event, such as:

• A marriage;
• The disability of a dependent; or
• The death of a beneficiary, spouse or executor, to name a few.

For example, a common misconception is that your assets will automatically pass to your surviving spouse in the event of your death. But, if you haven’t properly documented your wishes through a valid Will or beneficiary designations, you may be considered to have died “intestate”.

This means your assets will be administered under the intestate succession legislation for the province or territory where you live.

So, it’s possible your spouse may not receive all of your estate assets—even if this was your intention.

Protect your loved ones.

Do you own all the shares of your business?

If so, you may be limiting yourself from numerous tax and business transition opportunities.

An estate freeze of your shares can help minimize taxes and provide you with more flexibility.

There are a few tax benefits of an estate freeze.

Current capital gain on your shares is frozen. Any future growth is then transferred to the next generation, limiting your taxes at death.

As well, lifetime capital gains exemption can be multiplied with family members upon a sale.

You may also be able to pay dividends to lower-income adult family members subject to “Tax on Split Income” rules.

For example, if your business is worth $5MM, an estate freeze would lock in that value in your name.

Any future growth above $5MM would then accrue to the next generation.

For tax reasons, an estate freeze should be set up at least two years in advance of a potential sale — so early planning is key.