With retirement just around the corner, estate planning is at the forefront of many baby boomers’ minds. However, estate planning is not just for retirees. As younger generations shoulder the burden of rising living costs, generational wealth transfer becomes increasingly important. Recently, a client reached out to me to discuss his will. We’d discussed the topic a couple times in the past but this time he brought it up on his own volition. He mentioned feeling unsettled at the thought of looming travel plans, since he did not believe that he had a sufficient financial safety net for his children, if something were to happen to him. Whatever your motivation, having a well-planned estate is always a worthwhile goal.

Although the concept of an “estate” is typically associated with the affluent, estate planning is not just for the wealthy. Everyone can benefit from having an estate plan, regardless of financial status or background. An estate plan allows you to protect your assets, to minimize the impact of tax on your estate, and also allows for peace of mind for yourself and family members. Although it may seem daunting, tackling the process early can make it much easier. Here is a breakdown for setting up a will.  

Steps for Creating or Updating a Will

• Understand what your wishes are and how you are looking to pass your legacy to your beneficiaries
• Appoint an executor, who is the individual or corporation who will act on your behalf
• Consider tax implications
• Review when your will was last updated and reviewed by a lawyer to reflect your wishes
• Consider the benefits of having separate wills for corporations and properties outside of Canada

Probating a Will

Probate is the court procedure for formal approval of the will as the valid last will of the deceased, and appointment of the person who will act as executor of the estate. Each province has a different probate process in Canada.

Upon death, the executor of your estate will be required to file for probate with the provincial court. Although there is no estate tax in Canada, the executor must pay a probate tax, which can be as high as 1.5% of your overall estate value. This may not seem like a huge amount compared to other taxes, but it is beneficial to look at strategies to reduce it.

Reducing Probate Fees

There are different ways to keep assets out of the estate, and thus reduce the probate fee as much as possible. The most common strategies are as follows:

• Insurance Policy and registered accounts with named beneficiaries
• The use of Living Trust/Family Trust or Alter Ego Trust
• Joint-ownership of assets: Joint Tenants with Right of Survivorship (JTWROS) or Joint Gift of Beneficial Right of Survivorship(JGBRS)
• Gifting assets before death – most popular being principal residence

There are pros and cons for each of the above strategies. It is prudent to work with your financial planning team or consult with professionals if you are interested and would like to begin the planning process. Having a comprehensive estate plan in place will help you to preserve the fruits of your hard work, and give you and your loved ones peace of mind.