You’ve worked hard to save, buy investments and pay down your home. Most likely you want these assets to go to the people you choose for it to go to when you eventually pass on. And, if you’re like most Canadians, you would like to reduce the taxes on your assets to a minimum. Estate planning is simply arranging what happens to your assets in the event of your death.
In estate planning, the most important step in organizing your assets so you make the choices is to make a will. Dying without a will, or intestate, means that on your death the provincial government chooses how your assets are distributed. Usually, the first $50,000 of value goes to the surviving spouse and rest is divided among the children. In addition to losing choices, there are also additional delays and fees associated with dying intestate. These delays could be financial burdens to your family.
Getting a professionally prepared Last Will and Testament is the most important first step in planning your estate. Ensure once your will is complete that your financial and/or investment advisors are aware of your final wishes. That way, they will take steps that are in keeping with your final plans.
The Ontario probate fee is generally a 1.4 per cent tax applied to the entire value of your estate. There are some steps that can help you reduce or avoid paying probate, but take care that they don’t carry more negative consequences than the fee itself.
When you make a will, you must appoint an executor. Give careful consideration to who you appoint as executor. The responsibility is time-consuming and complex and the stress of dealing with grief and financials can be challenging. It may also create family strife if, for example, one sibling is appointed over another, especially if the process takes longer than expected.
Once you make a will, make a point to review its contents regularly—perhaps once every year or two. An out-of-date will can slow down the process and may cost more in probate or other fees as courts try to track down assets you no longer have. New additions to the family may not be included while those who are no longer members, due to divorces or deaths, may still be listed. Regularly updating your will is a good strategy to make sure your plans are still accurate.
If you are a high net-worth individual, discuss options in more detail with estate planning professionals and financial advisors. Plans, such as trust funds, may be good choices for transferring your assets sooner, rather than later.
For more information on estate planning, visit www.attorneygeneral.jus.gov.on.ca/english/justice-ont/estate_planning.asp.