Estate Planning & Wills
  1. What are some aspects of estate planning?
  2. What is a will?
  3. Name a person or company to be the “executor”
  4. Appoint a guardian in your will
  5. What happens if you don’t make a will?
  6. It’s important to make a will properly
  7. Your will can be changed after you die
  8. Taxes may also have to be paid
  9. You should hire a Financial Advisor to help you
  10. It’s important to update your estate plan
  11. Where should you keep your will?

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What are some aspects of estate planning?

With estate planning, you may be able to reduce the amount of probate fees and taxes that your estate would otherwise pay.

Consider “joint assets.” Joint assets, such as a joint bank account that two or more people own, or a house owned by two people as joint tenants, have a "right of survivorship." This means that when one person dies, the other person or persons own the asset. So if you and another person own a house as joint tenants, the surviving joint owner will get the house when you die. The house is an asset that passes outside your will. No probate fees will have to be paid by your estate regarding the house, and if the house is your principal residence, no tax will be paid by your estate.

However, note that recent court rulings indicate that if your joint asset is not with your spouse or a minor child, but instead is with an adult child or other adult, then that joint holder owns the asset in trust for you – unless you specify otherwise. So, if you add an adult son to your bank account as a joint holder, and you want the account to belong to him when you die, you must leave a written declaration that this is your intention. Otherwise, it will be presumed that your son holds the bank account in trust for your estate, and the money will be paid out according to the terms of your will.

A Registered Retirement Savings Plan (RRSP) is another asset that passes outside your will if you name a beneficiary in your RRSP. That beneficiary will get the money in the RRSP directly from the company holding the RRSP, and not from the estate.

Also, depending on the size of your estate, you might want to establish a trust, which protects against a Wills Variation Act claim
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What is a will?

A will is a document in which you explain what you want done with the assets that you own solely in your own name when you die. These assets typically consist of real estate, money, investments, and personal or household belongings that you own.

A will generally doesn’t cover assets that you jointly own with another person, for example, a joint bank account or a house owned in joint tenancy. Also, a will may not apply to assets like life insurance or RRSPs, where you have already designated a beneficiary.

There are opportunities to transfer assets to beneficiaries outside of a will, without tax and other cost consequences. This is called “estate planning” – discussed at the end of this script.
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Name a person or company to be the “executor”

The executor gathers up the estate, pays your debts and divides what remains of your estate among the “beneficiaries,” the people named in your will to receive a share of your estate. Choose an executor you trust and who will likely still be alive when you die. He or she may be a trusted family member or friend; it helps if he or she is also a good book keeper and communicator. If you like, you can appoint more than one executor who can act together as co-executors. You should also appoint an alternate executor if the first executor isn’t able to act. If you have a complex estate or investments or need someone to take over the operation of a company, you should name a professional executor like a trust company.
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Appoint a guardian in your will

There are two types of guardianship. The first type is a guardian to look after your children if they’re younger than 19 when you die. This will avoid confusion in your extended family as to who should care for your children if both you and your spouse die before they become adults. Make sure your appointed guardian agrees to be the guardian. It’s especially important to name a guardian if you’re a single parent – otherwise the court might appoint someone you would not want.

The second type of guardianship is guardianship of the estate. This means that the guardian can receive funds from your executor for the benefit of your child. If you’re a separated parent and the surviving parent will be looking after your child, but you want a different trusted person to be the one who decides what funds your child needs for educational or other necessary expenses, then be sure to name a guardian of the estate.
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What happens if you don’t make a will?

Then your estate will be divided in a certain way according to the Estate Administration Act, and this division may not be what you would want.
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It’s important to make a will properly

Although a will may seem simple, it’s really a complex legal document. To make an effective will requires a good understanding of property ownership rules and the law about wills. There are rules that must be followed, no matter how simple the will, otherwise the will may not be valid. And the words used must be chosen carefully so the will is clear and unambiguous.
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Your will can be changed after you die

If your will doesn’t properly provide for your spouse (including a common-law spouse) or children, they can make a claim under the Wills Variation Act. So if you’re thinking of leaving a spouse or child (even a self-sufficient adult child) out of your will, or giving them less than they might reasonably expect, be sure to consult with a financial advisor or lawyer about the situation.
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Taxes may also have to be paid

When a person dies, the law assumes that they sold their assets on the date prior to their death date, and there may be substantial capital gains on those assets. If so, the estate will have to pay tax on those gains to the Canada Revenue Agency. But if you leave your assets to a named beneficiary, tax consequences may be reduced. If you own assets that will attract capital gains tax on your death, you should speak to a financial advisor or a lawyer to see how you can minimize this tax.
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You should hire a Financial Advisor to help you

An experienced financial advisor will know about the rules that apply to wills and can help with estate planning so as to save money for your beneficiaries. And you’ll have the peace of mind of knowing that your will is properly drafted and valid, and that your estate will be paid out according to your wishes.
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It’s important to update your estate plan

A well-drafted will anticipates different scenarios and plans for these (for example, what happens if an adult child or grandchild dies before you). But you should still think about changing your will whenever your financial or personal circumstances change or if there’s a change in the beneficiaries. For example, if you made a will when your children were young and named your parents as guardian and executor, when your children become adults, you’ll no longer need the guardian clause and you might want your children or a sibling to be executor instead. It’s a good practice to review your will every three to five years to ensure that it still reflects your current wishes.
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Where should you keep your will?

You should store your original will in a safety deposit box at your bank so that you have a permanent, safe and fireproof location. Your original will is what your executor will need to present to the Probate Registry in future, not a copy. It’s recommended that you keep other important documents in your safety deposit box too, so your executor has what he or she requires when the time comes.
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