When properly structured, an estate plan can reduce the taxes and expenses of your estate, simplify and speed the transition of assets to the next generation and ensure that your beneficiaries are protected.
We've provided the following information to help guide you through the estate planning process and to introduce you to some of the most important options available to you:
Creating an estate plan does not necessarily require a substantial commitment of time or money. Most often, an estate plan can be constructed by following these six simple steps.
While the Will represents the most common means of estate asset transfer, there are four methods that can be considered when creating your estate plan. Using these alternative methods, however, must always occur in conjunction with a valid Will. Without a Will, the dissolution of your estate will be complicated by provincial intestacy rules (i.e. dying without a Will).
If you die without a Will you are considered to have died "intestate." Unfortunately, many individuals believe that if they were to die without a Will that their estate would simply pass to their spouse. While a spouse and children will likely end up with the estate's assets it is very likely it will not happen exactly as you would have intended.
While there are no true "estate taxes" in Canada there are three potential taxes or pseudo-taxes that may be incurred at death: Income Tax Due to Deemed Disposition, Provincial Probate Taxes, U.S. Estate Tax (on your U.S. assets).
Life insurance can play a significant role in your estate plan as it provides a solution to a wide range of potential objectives. In general, life insurance serves one of two purposes: either to create an estate for your heirs or to preserve your existing estate. Generally, life insurance premiums are not tax deductible but the benefit paid to the estate (probate may apply) or a beneficiary (probate would not apply) is also not subject to income tax.
The final component of your estate plan should address potential situations where you may become physically or mentally incapacitated. This is achieved by creating an enduring power of attorney. Without an enduring power of attorney, your attorney (not necessarily your lawyer or notary) cannot act on your behalf during a period of incapacity until they receive court approval.
