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Personal Finance Will power: How to ensure your estate plan benefits your heirs, not the tax man

No one likes to think about dying, which is perhaps why so many Canadians don’t have a legal will. However, if you pass away without one, you are considered to have died intestate and the rules of your province will determine how your estate is divided. If you don’t have a will, or it hasn’t been updated in a while, our guide to estate planning will set you on the right path.

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Getting started

A simple guide to estate planning

Individual requirements range from drafting a simple will and enduring power of attorney to a complex estate plan that includes an estate freeze. This guide is meant to get you thinking about your situation.

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Executors: Pick the right person to handle your legacy

Choosing your executor is an important task since he or she can affect everything from how much tax you might pay on death to how efficiently your estate is distributed. Here's what to consider when making your choice.

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As your life circumstances change, so should your estate plan

Everyone should review their will every five to seven years or after every substantial life event, which includes birth or adoption of a child or grandchild, marriage, recovery of an inheritance, children moving out of the home and loans to relatives to buy a house or pay for education, as well as death, divorce and remarriage.

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Do you have an outdated will? Seven estate planning mistakes to avoid

According to a 2012 lawyer's survey, 56 per cent of Canadian adults do not have a signed will. Many assume their assets will automatically transfer to their spouse. Generally, this is not the case.

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Avoid being ‘penny wise and pound foolish’ with probate planning

Clients often focus on avoiding probate without really understanding what some of the implications of doing so may be. Let’s review what probate is.

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Keeping peace in the family

A parent’s poorly written will can tear the family apart

One key, and oft-overlooked, consideration when drafting a will, particularly when the estate is sizable, is differentiating between fairness and equity in the division of assets, he says. This is where conflicts tend to arise between children, leading to costly and stressful litigation.

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How to discuss your estate plan with heirs (and why it’s critical to do so)

Having a conversation about your plan will demonstrate that you've given thought to your own financial well-being. It can also prevent confusion – and even legal battles – after you're gone. Setting up your heirs to live in harmony with each other and with the decisions you've made often depends on having a discussion while you're still alive.

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Disinheriting family can lead to big legal costs for your heirs

Disinheriting a child – or any dependant – can have significant repercussions that can cost your heirs big legal fees and hurt relationships. Your wishes might ultimately be disregarded. Make sure you obtain good legal advice in your province before disinheriting someone.

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Death and taxes

Don’t let the CRA be your beneficiary when you die

In most cases, the tax collector gets one last cut of your wealth, and the final bill can be supersized – coming close to 50 per cent of the value of your investments. For this reason, adequate planning is worthwhile.

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The tax benefits of giving your heirs money while you’re still alive

Canada has no gift tax, so cash given to children, grandchildren or any other individual while you're alive won't be taxed.

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Transferring a cottage after you’re gone: Five options

Second homes, cottages and other vacation properties are taxable assets. Unlike a primary residence, the increase in value of a second home could be a major tax hit for heirs if not properly handled.

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Want the kids to inherit the house? Avoid these common tax mistakes

The most common mistakes, which are often accidental and stem from a lack of knowledge, result in inheritance conflicts, the payment of additional income taxes and most importantly, prevent parents from achieving their goal of maximizing their family's wealth.

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Six ways to benefit your heirs, not the taxman

More than half of high-net-worth families intend to pass on all their wealth to their heirs but are not doing a lot of pre-planning. Here are a few strategies they should consider.

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Other considerations

A warning for couples who have split but not divorced

Many people think the mere act of separating will result in legal changes to their wills, estate plans, powers of attorney and beneficiary designations, but that’s incorrect.

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Have you divorce-proofed your heir’s inheritance?

There are many effective ways to safeguard family wealth in case an heir gets divorced in the future.

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Well-to-do business owners face estate-planning hurdles

If you own a business, chances are that you have neglected your estate planning. Creating a plan that will outlive you can be daunting and complicated, so it needs to be part of your regular business planning.

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Lack of a ‘Titanic clause’ could swamp estate planning

Among estate-planning professionals, the Titanic clause is usually known as the common disaster or simultaneous death clause. Without it, things can get messy.

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The perils of bequeathing money to family overseas

Canadians who plan to leave an inheritance to loved ones abroad face a challenge: how to begin navigating the divergent system of international estate and tax laws, particularly when considering that each country has its own set of tax and compliance obligations.

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Three ways to pass your wealth to your children without spoiling them

One of the perennial issues high-net worth families worry about is how they can pass their wealth to the next generation without spoiling their kids or destroying their drive or ambition.

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A big inheritance can do more harm than good

Even if they are planning to leave substantial sums of money to their children, Canada's millionaires are concerned about the consequences of their offspring simply waiting around for a big fat legacy. One way to avoid that is to establish a family foundation.

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Don’t forget about digital assets in your estate plan

Overlooking digital assets in estate planning – which includes everything from cryptocurrencies to eBay and PayPal accounts to loyalty reward programs and social-media sites – can create huge headaches down the road for executors, powers of attorney and beneficiaries.

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