Estate planning

From finiki
Jump to: navigation, search

Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity. Typical elements of an estate plan are: last will and testament; power of attorney for finance; and living will (power of attorney for personal care). High net worth individuals and blended families may find trusts a useful estate planning tool.

You also should remember to keep your estate plan up-to-date, as your circumstances may change due to life events and legislation may change. Suffice it to say, that this area of financial planning that generally requires professional assistance.


Simplify your affairs by naming beneficiaries for life insurance policies, registered plans such as Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Tax-Free Savings Accounts (TFSAs) and company pension plans. Such designations allow assets to pass outside your estate, which will speed distribution and reduce costs.

You should prepare a last will and testament. This document specifies how your property is to be distributed to your heirs, names the person responsible for overseeing this disposal (the executor but also sometimes trustee, administrator, or liquidator), and suggests who should be responsible for the care of minor children. If you are in anything other than the simplest family and financial situation, engage a lawyer to do it right. (Residents of Quebec should consult a notary.) To save the lawyer time and yourself fees, prepare beforehand by:

  • considering who would make a good executor, preferably a trustworthy adult, younger than you are, and residing in the same province
  • communicating with the potential executor to verify that they are willing to serve
  • identifying an alternate should the primary executor be unable or unwilling to serve at your death
  • identifying trustworthy people who will be good guardians for your minor children (perhaps the same as the executor, perhaps not)
  • identifying the beneficiaries who will receive your assets and what fraction of your estate will go to each

If you have more than minimal assets at death, your will is subject to a process called probate (in some provinces, administration). Probate is essentially an approval by a special judge, who will usually confirm your wishes as expressed in the will and issue what are generally called letters probate. Such documents will be required by your executor to take temporary title over your assets so that they can be distributed to beneficiaries. Fees for this process vary considerably by province.

The court will also name guardians for minor children. Your desires as expressed in your will carry considerable weight. However, the court is tasked with ensuring the welfare of such children and has considerable latitude with respect to guardianship. (The court also has the power to vary the will's disposition of assets should it disadvantage minor children or other dependents.)

If you have no will at your death - this is called dying intestate - provincial law specifies how your assets are distributed. This may or may not correspond with your desires and objectives. It will certainly result in delays as courts and the Public Trustee will be involved.

Mental incapacity

You should have an enduring (sometimes durable) power of attorney for financial matters. If you become mentally incapable and unable to look after your own finances, name someone you trust who can and will do the job. In most provinces, you must have a lawyer draft this document. Take care about who you name to hold this power, as the document empowers the person to act as if they are you with respect to all of your assets.

You should also have an enduring power of attorney for personal care. (The name and format of this document varies from province to province.) If you become incompetent to make decisions about where you live and your health care needs, someone needs to make those decisions for you. Appoint someone you trust to do so.

If you do none of these, the provincial government and/or the courts will step in and act in your stead. You may not get what you want and the costs may be high.

Living wills

A living will, or power of attorney for health and personal care, documents your substitute decision maker and your wishes should you not be able to make health and personal care decisions for yourself.

Death of a spouse

According to Statistics Canada, in 2003, 82% of widowed Canadians aged 65 and older were women, and senior widows outnumbered senior widowers by about five to one.[2]

One's affairs can be in perfect order but the surviving spouse still has to deal with the loss which can be overwhelming. At the same time the spouse knows that life goes on and that there are things requiring attention and, yet the ability to think straight, seems to be missing. Life is a jumble: I feel unable to do just about anything on my own at this point. To help me through this process-life insurance-pension-taxes-rrsp's-investments etc., do I need a lawyer, accountant, financial planner or a combination of professionals? The questions are daunting. You can begin at the funeral home. Funeral homes do more than just deal with funerals. They offer grief counseling. They will usually help with the Canada Pension Plan death benefit application. Try not to make any long-term decisions right away.

Assemble paperwork

  • Death certificate - A certified copy of a death certificate will be needed for many financial procedures.
  • Insurance policies - These will help you determine what benefits you are entitled to.
  • Marriage certificate
  • A complete list of all property


If you are the executor of your spouse's will, after assembling the paperwork, you must:

  • Obtain death certificates
  • Pay funeral bills, taxes and life insurance
  • Make funeral arrangements, help with burial arrangements and handle the obituary
  • Deal with creditors and pay liabilities
  • Handle property sales and appraisals
  • Call the life insurance agent and request claim forms
  • Make a claim for retirement benefits with the Human Resources department at your spouse's workplace
  • Apply for CPP survivor and death benefits
  • File tax returns
  • Notify banks, insurance companies and brokerage firms of the death
  • Update insurance policies and change beneficiaries
  • File for and obtain Letters of Probate or Letters of Administration through court offices
  • Where the deceased is a beneficiary of your RRSP or RRIF or TFSA, amend such designations
  • Re-title property held in joint tenancy

Further reading


  1. Foster, Sandra E. (2007). you can't take it with you, Common-Sense Estate Planning for Canadians (fifth ed.). John Wiley & Sons Canada, Ltd.. p. xxii. ISBN 978-0-470-83846-4.
  2. Canada Retirement Information Centre, Moving Forward (Death of a Spouse), Viewed March 10, 2009

External links