5 Tips for Estate Planning in Ontario
Everyone should take time to plan their estate. Here are some of the key estate planning factors to keep in mind.
Know the tax implications
Certain measures you take now can help you avoid a heavy tax burden on your estate later. Upon your death, the estate must pay an estate administration tax, which is calculated on the total value of the deceased’s estate, including all your possessions and debt. For some, this tax burden may be as high as 50% of taxable income.
Alleviate the tax burden by transferring your RRSP’s and RRIF’s to your spouse or child, setting up a trust for a spouse, and if you own assets abroad, it’s important that you check the estate taxes that apply in that country to determine the best way to deal with them.
Draw up your will with care
The purpose of a will is to ensure that your money and estate is inherited by the people you want to benefit. This also includes possessions that may have personal value to your family. By preparing a will, you can help avoid any disagreement and confusion amongst your loved ones. Without one, the law will determine who inherits your assets.
While the contents of your will will be tailored to your particular circumstances, take the following into account when drawing up a will.
- your current family situation
- your marital status
- your family’s needs
- the value of your estate
- the type of assets in your estate
- what you have in mind for your estate
Your family members will be grateful for your efforts to ensure no detail was neglected during the planning of your estate. This downloadable chart is designed to help you take a personal inventory of your assets.
Choose the right trustee
A trustee is the person who will be responsible for carrying out your wishes after your death. It’s important that you choose this person wisely. Before making a final decision, make sure your trustee:
- is trustworthy
- has the skills and time required to accomplish the task you require
- will be able to treat family members fairly and objectively
Know the importance of life insurance
An essential estate planning tool, life insurance can be useful as it enables your heirs to pay estate taxes. Buy a life insurance policy where the proceeds are payable to the estate to cover the taxes on the deemed disposition of your assets.
Set up powers of attorney
Accidents happen. Illness or an accident may lead you to become incapacitated and unable to make important decisions. A power of attorney is a document that gives someone else the power to act on your behalf. Be sure to make two powers of attorney – one for property and one for personal care. Like your will, your powers of attorney has to be made with care. This will grant peace of mind to you and your family.
Planning your estate requires careful attention. To ensure your plan is customized to suit your needs and the needs of your beneficiaries, consider getting assistance. For access to a team of experts and guidance through all the steps required for effective estate planning, find out more about our estate planning assistance service.