Estate Planning

Presented By: Ben Reale, CFP

What is estate planning?

• Enables your wishes to be carried out after you are gone

• Can ensure your interests are taken care of before and after death

• Important for all ages• Much more than just a will

How it can help

• Avoids family conflict at a difficult time• Allows tax efficient transfer of wealth• Maximizes estate value• Meet obligations when you pass away• Can help ensure your money is spent as per

your desire• Peace of mind

Some expenses at death

• Taxes on the deemed disposition of assets• Probate fees• Funeral costs

– Average funeral costs in Canada are $5,000-$7,000

• Outstanding debts

Some concepts

• A will• Power of attorney for personal care• Power of attorney for financial matters• Trusts (Inter-vivos and Testamentary)• Seek legal counsel

Without a plan

• Intestate: no will or invalid will at death– Law decides who gets what

• Personal finances in limbo• Healthcare wishes unfulfilled• Distribution to heirs is delayed

Some taxes at death

• Probate – Charged on eligible assets

• Assets are deemed sold at fair market value (capital gains taxes)– Including RRSPs, LIFs, LRIFs, etc.

• Some exceptions:– Capital gains on principal residence– Transfers to spouse via rollover provisions

Beneficiary designation• Permits direct transfer to chosen heirs• Eliminates probate• You maintain control of asset while alive

More on wills

• You select and direct the Executor• You state who gets what• You establish trusts• You employ tax saving strategies

Review your will

• Net worth changes• Legislation changes• Situations change• Circumstances change• People change

Update your will

• Anyone mentioned in your will changes their name

• Executors become unsuitable due to age or illness

• Beneficiaries die or become incapacitated

• You sell any specifically gifted property

• You divorce, separate or enter common (law) relationships

• You move to another jurisdiction

• You purchase or inherit real estate in another jurisdiction

• Your marriage automatically revokes any prior will

• You have children, new step-children or grandchildren

• You need a new guardian for minor children

Validating a will

• A verification of the will by the courts• Recognition of the executor• Required for shares and real estate• Financial institutions may require for their

protection• Probate fees apply, though in Ontario these

are called Estate Administration Tax (EAT, because it’s the last bite they take!)

• .50% on 1st $50K plus 1.5% on excess

Estate planning checklist

I will… have a valid Will I will update my Will

• Because times change, circumstances change and… people change

I will ensure I have minimized taxes upon death

I will ensure all dependents and special needs are taken care of

Power of Attorney

• Two main types in Ontario• For property & for personal care• Property refers to financial transactions• Personal care refers to health decisions

• If none exist, a family member or friend can apply to be appointed guardian

• The court can accept or appoint The Public Guardian and Trustee office as well

• For a complete guide with forms, visit:

www.attorneygeneral.jus.gov.on.ca

Summary

• Have an updated and valid will• Have powers of attorney• Estimate taxes on death and consider

options• Choose ways to pass along assets that are

most tax efficient and meet your mandates• Estate planning checklist• Do not procrastinate• Q & A