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INVESTING ADVICE


Guide to Estate Planning for Canadians


What happens to your assets after you pass away? 

Whether you're just starting your family or enjoying your twilight years, you want to make sure that you get to determine what happens to all your assets once you're gone. And you certainly don't want to leave your family burdened with financial, legal and tax complications. 

That's where your estate plan comes in. 

An estate plan is far more than appointing who gets your grandfather clock. A proper estate plan takes into account the various financial, legal and tax implications that will kick in once you pass away.

It prepares for the various eventualities to ensure that your legacy is passed on according to your wishes, while alleviating as much of the burden (much less financial strain) from your loved ones as possible. 

In this guide, we'll walk you through the various components of an estate plan from the perspective of planning for your own death as well as dealing with the passing of a loved one. 

Download our free Finances And Your Estate checklist


What is estate planning?

An estate plan is an overall strategy to help you manage your finances as you grow older, and make prudent decisions in your twilight years. It preserves and protects your assets during your lifetime and upon death and ensures they are distributed according to your wishes.

A properly prepared estate plan will:

  • Help minimize income taxes and probate costs
  • Provide for charitable donations and other gifts
  • Ensure your family does not face financial hardship upon your death
  • Clearly define your wishes regarding the final distribution of your assets, in order to avoid any future conflicts

Your estate plan will state the person you’ve appointed to control your finances if you are no longer able to. It ensures that your wishes are honored and can greatly simplify matters in getting the financial affairs of your estate resolved quickly.

No matter what your age, consider setting up an estate plan to protect your assets and your loved ones.

Watch our Senior Wealth Advisor, Travis Koivula, walk through some tax-saving strategies when dealing with your estate. 


Situations when you need an estate plan

You are never too young or too old to have an estate plan. Once you’ve created it, you should review it regularly, particularly if you’ve had a change in your situation. For example:

  • Recent marriage or divorce
  • Blended families or second marriages
  • Children with a disability or money issues
  • High net worth or high tax liability upon death
  • Own assets or have children


Components of estate planning

An estate plan will cover the following components:

  • Life insurance
  • Joint accounts and property
  • Pre-planned funeral
  • Financial records
  • RRSPs, RRIFs and TFSAs
  • Planned giving and charitable gifts
  • Living trusts
  • Gifts to family
  • Taxes



How to get started with estate planning

Estate planning requires a lot of thought and careful consideration—it’s a good idea to get started early.

While it pays to do your own research, the issues that may arise can be complex with unintended consequences. That’s why help from a professional is always recommended.


Checklist: Keeping Your Estate Plan Up To Date

Review your will every 3 to 5 years, as well if there are any life events that change your situation.

  • Has there been a change in your marital status?
  • Has there been any change in your family?
  • Any new children or grandchildren?
  • Have your children who are beneficiaries reached the age of majority?
  • Are the guardian appointments still appropriate?
  • Are any of the beneficiaries deceased?
  • Is the charity you named as beneficiary still in existence?
  • Is your executor still appropriate: i.e. age, location, family situation, willingness to accept the appointment?
  • Are there any changes in income tax legislation to take into account?
  • Are there any changes in the nature or extent of the assets you own?


Helpful resources for estate planning


Setting up a will

A valid, current will is an essential part of planning your estate to ensure your wealth is properly distributed according to your wishes after you pass away.


What’s a will?

A will is a legal document that states what you want done with your property when you die. A will has no legal effect until you die and you can change it at any time.

In your will, there are key two appointments you make: the executor of your will and the guardians of your minor children.

The recipients of your assets are called beneficiaries (these can be individuals as well organizations, like nonprofits); the items beneficiaries receive are called bequests. Bequests can be a sum of money, a percentage of the estate or an object.

An important component of writing your will is to account for alternatives in case your initial preference is no longer an option.


Not having a will

Setting up a will puts you in power of how your assets get distributed once you pass. If you don’t have one in place, your estate will be distributed by the government in accordance with provincial laws.

Without a will:

  • You’ll lose control over who gets how much of your estate and when
  • You give up the right to appoint a guardian of your choice for any young children
  • Your estate will be distributed to your next of kin according to provincial laws

In this scenario, the process of settling your estate could be long and expensive for the loved ones you leave behind, and your estate and assets will likely not be divided according to your wishes.

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Helpful resources


What’s an executor?

The executor of a will is the person, appointed by the deceased in their will, who is responsible for carrying out the wishes of the deceased as outlined in their will, distributing and managing their assets to the beneficiaries of the will, and settling the estate debts.

The executor acts in accordance with the wishes of the deceased, for the benefit of the beneficiaries. And, because your estate could take up to 18 months to settle and may require a lot of your executor’s time, you want to ensure that the person you choose is up for the task.


Primary responsibilities of an executor:

  • Protect estate assets
  • Assemble inventory and value assets
  • Paying your debts
  • Obtain probate from court if applicable
  • Distribute estate amongst named beneficiaries


Who should I choose as my executor?

Your executor should be someone who has the time, health and skills to be able to settle your estate. It’s ideal if they also live in the same general area as you. Plus, they need to be organized, and comfortable dealing with lawyers, accountants and potentially distraught family members.

Here are some things to consider about who to appoint as your executor:

  • It should be someone you trust
  • Consider their age, where they live, the complexities of their families, etc…
  • You can appoint more than one (co-executors)
  • You can also appoint a corporate executor: a professional or a trust company


Helpful resources


What do I do if I’ve been named an executor?

One of the first things you should do as executor is set up an estate account. This account will hold the funds of the estate and will be used to pay for funeral expenses and outstanding bills.

Settling the estate of the deceased may take between 12 to 18 months and often requires professional assistance to complete. Occasionally, this process can be complicated by difficult family dynamics or legal circumstances.

Helpful links for being an executor:


Probate

What does it mean to probate a will?

Probate is a legal process where the court confirms that a will is legally valid. A valid will defines who’ll assume control of the estate assets of the deceased, and designates an executor to make decisions on the estate’s behalf.

Once the process is finished, a letter of probate is granted to the executor. The executor can then begin their duties of settling the financial affairs of the deceased and distributing the remaining assets.

The probate process generally takes several weeks to complete, but can sometimes take longer.


How do I make sure my will is legally valid?

Many do-it-yourself will kits are available in stores and online, but wills created through these sources could be rendered invalid or open to interpretation.

A lawyer or notary should help you create your will to ensure it is valid and legally binding. You should review your will regularly and ensure it’s updated in the event of a significant change in assets or a major life change such as a new child, grandchild, or change in relationship status.


How much does probate cost in BC?

There are fees payable to the court for the probate process. Probate filing fees are dependent on the net worth of the estate and are calculated in BC as follows:

  • Estates under $25,000 – no fee.
  • Estates from $25,000 to $50,000 – basic fee of $208 plus $6 for each $1,000 up to $50,000.
  • Estates over $50,000 – basic fee of $358 plus $14 for each $1,000 of value over $50,000.

In most cases, these fees are paid using funds from the estate itself.


DO YOU NEED HELP WITH THE PROBATE PROCESS?

As executor, you can handle the probate process on your own, but it can be overwhelming so we’re here to help make things simpler for you. We offer services from Concentra Trust that can help. Stop by your nearest branch or contact us to find out more.

Helpful links


Power of attorney

What’s Power of Attorney?

Power of attorney is a legal document that gives another person the power to take care of your financial and legal matters for you. This can include paying bills, doing banking or selling real estate on your behalf.

Giving someone Power of Attorney gives you the reassurance that your affairs and your loved ones will be taken care of when you can no longer take care of matters yourself.

A Power of Attorney only applies while you are still alive and only while you have mental capacity. Mental capacity refers to your ability to understand information about a decision, retain that information long enough to make a decision, weigh the information available to make the decision and communicate a decision.

In order to maintain someone’s Power of Attorney after you lose mental capacity, you need to have an Enduring Power of Attorney.

In some cases, you may also wish to grant someone Power of Attorney when you are capable of handling your own affairs but unable—for example, while you are working overseas.

The most common choices for an attorney are a family member or a trusted friend, but they could also be:

  • A personal care of health care provider
  • An employee who works in a healthcare facility
  • A guardian or trustee
  • A financial institution


Helpful resources for appointing a Power of Attorney


What’s Enduring Power of Attorney?

Enduring Power of Attorney (EPA) is a legal document that gives another person the power to take care of your financial affairs if you become mentally incapable of managing your own finances in the future.

The difference between Power of Attorney and EPA is that the Power of Attorney ceases to operate if you lose mental capacity. Both are only in effect while you are alive.


What’s a Representation Agreement?

A Representation Agreement is a legal document that gives another person the power to make health care and treatment decisions for you when you are no longer able to make those decisions.

This is different than a Power of Attorney where you give someone only the authority to make legal and financial decisions for you.


Why should I give someone Power of Attorney?

When you are granting someone Power of Attorney, you can be specific in what powers you are granting them. You can also name multiple attorneys to handle different aspects of your life.

For example, you can designate a family member to oversee your personal care and a financial institution to handle your property. G

ranting an Enduring Power of Attorney allows your attorney to continue to manage your affairs even after you become mentally incapable.


What is a trust?

A trust is a way to hold and protect your assets for a spouse, child or disabled dependant while sparing them from expenses, paperwork and time.

A trust is overseen by a trustee. This is a person or company who manages your assets, or estate, when you’re no longer able to, and administers them on your behalf. A trustee will ensure your trust is properly taken care of and carried out according to your wishes.


Why would you want to set up a trust?

Here are a few reasons why you might need a trust:

  • To give a gift to a minor from your estate to be used for a specific purpose, such as paying for their education when they enroll in university
  • To ensure the financial well-being of your spouse or a disabled dependent after you pass away
  • As a means to hold ownership shares in your company after you pass away until the next generation is ready to receive them
  • To give a charitable donation in your name after your death


How do I choose a trustee?

When choosing an individual or organization to be a trustee for your assets or estate, there are several guidelines you should keep in mind:

  • Your trustee should be a person who has proven to be reliable, experienced and sensible. Your trustee will be making important decisions on your behalf, and should be objective and able to decide what’s in the best interests of the beneficiaries.
  • Your trustee should be someone in good health who lives relatively close to you. You may wish to name a second or third candidate, in case your first choice is unable to perform their duties as a trustee.
  • If possible, your trustee should have experience with financial and legal matters.
  • You may wish to change your estate trustee as your life changes – if you start a family or you go through a divorce, the trustee you have may no longer be the most suitable choice.


What does a trustee do?

If you’re named a trustee for a spouse, loved one or friend, you’ll manage and administer their estate when they pass away.

A trustee’s role is important, and rewarding – you’re fulfilling this person’s final wishes.

As trustee, you’ll need to manage the business affairs of the deceased, and depending on the details of the estate, you could be serving in the role for some time. For instance, if a trust is set up to fund the education of a child or grandchild, you may be guarding these assets for a decade or longer.


What are the responsibilities of a trustee?

Some of your responsibilities as trustee could include:

  • Reading the will and determining that the will is the last will of the deceased
  • Locating and notifying the beneficiaries
  • Opening an estate bank account
  • Setting up and administering any trust funds included in the will
  • Distributing assets as detailed in the will
  • Compiling an inventory of assets and debts
  • Settling debts from the estate account
  • Filing taxes of the deceased


Helpful Resources


Insurance and Estate Planning

Life insurance can help you create an estate for your loved ones, or preserve the estate you’ve worked a lifetime to build. Our insurance experts can help you select a policy best suited to your needs.


The role of insurance in estate planning

Insurance can help you protect and preserve your hard-earned assets. Many of the insurance options we offer can become an integral part of your estate plan:

  • Immediate assets for the estate: An insurance plan can provide a much-needed cash flow for your loved ones in the event of your passing—especially in times when it’s not prudent to sell off your assets due to factors such as a poor investment return or a weak real estate market.
  • Protect your assets: Insurance can cover off the costs of probate, taxes and capital gains that will affect the value of your estate—your loved ones will receive more of the assets you worked so hard to attain.
  • Estate equalization: Ensure that your estate will be equally divided amongst your children. If you’re leaving a business or property to one of your children, insurance can make certain that other siblings receive the same value, without having to sell businesses or properties.
  • A tax shelter for your investments: Insurance can work similar to a tax-free savings account (TFSA) to shelter your investments from taxes.
  • Long-term care solutions: Canadians have seen an increase in life expectancy. Insurance can help put a plan in place for the long-term care costs of your loved ones.
  • Funds for final expenses: The average cost of a funeral in Canada is $10,000. Insurance can help you plan your funeral and ensure that the cost is not a burden on your family and loved ones.


Unique Advantages of Life Insurance

  • Tax Efficiency
  • Timeliness
  • Wills Variation Act
  • Low Investment Risk
  • Rate of Return


4 Important Considerations When Making Your Estate Plan

  • Always have a will and ensure it gets updated
  • Carefully consider who your executor is
  • Plan for potential issues that may arise as you get older (Power of Attorney, Representation Agreement, Life Insurance)
  • Consider arranging a meeting with your advisor to review your current estate plan to ensure it meets your needs


After the passing of a loved one

When a parent, spouse or family member passes away, there are important matters that will need to be looked after. That said, give yourself time to grieve first.

Some important tasks to settling the estate of a loved one include:

  • Find out if your assistance is needed at the deceased’s residence to relocate pets, collect mail, dispose of food, or look after other urgent issues
  • Locate the will of the deceased and have it accepted for probate
  • Ensure any dependents of the deceased have proper care in place
  • Notify friends and family of the deceased who may be unaware that this person has passed away
  • Contact the deceased’s employer (if they were employed) and find out if they had life insurance, a pension, benefits, or outstanding pay that are owed to beneficiaries or the estate
  • Plan the funeral—these expenses are normally covered by the estate or the deceased may have had a pre-paid burial plan
  • Order a death certificate—you’ll likely need multiple copies to settle the estate if you are the executor
  • Contact any financial institutions the deceased had accounts with to notify them—if the deceased had RRSPs or RRIFs, find out who the beneficiaries are
  • Determine if the deceased owned jointly held property or other assets that need to be dealt with
  • If you’re also the executor of the estate, you’ll need to settle the debts of the estate, locate all the assets and disperse money/assets (if applicable) to the estate beneficiaries

Helpful resources


How can we help you?

Whether you're looking at making sure your estate is properly planned or you're dealing with the estate of a loved who has passed, you don't have to do it alone. We are here to help. Our advisors have the experience and expertise to make sure that you don't have to figure out these complex matters on your own.

Get in touch with us. 

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