The Basics of Estate Planning in Ontario

When we hear the word estate we often picture large properties, on a landscape with rolling hills, or by a lakeside – but that is simply not true. Everyone has an estate, whether big or small. An estate is the collection of assets and liabilities that you own upon death.

Estate planning is the process of making decisions about how your assets and affairs should be managed during your lifetime and after your death. Wills and Powers o f Attorney are important documents which form part of your overall estate plan.

Many clients have described a discomfort with beginning the process because it ultimately contemplates what happens upon death. However, the planning should be reframed as protecting your loved ones and your wishes, while ensuring that your spouse, children, parents, siblings, and other family members receive what you intended to leave for them, in the right amounts, and without hassle.

Although you may have an idea of how you would like your estate to pass in your mind, procrastinating with putting those wishes on paper can be costly. The law will generally not recognize informal promises made to your loved ones, or family expectations of how the estate should be passed down. If you pass without a Will, you have essentially lost your voice, and your estate will be distributed according to the intestacy rules of the Succession Law Reform Act.

What is a Will?

A Will (also known as a "Last Will & Testament") is a document that shares instructions on how to distribute a person’s property once they have passed away. Although laying out a dispositive scheme is a key feature of a Will, the document can help you achieve much more. It allows you to appoint a trusted person to administer your estate after you’re gone, appoint a guardian to take care of your minor children, and establish trusts for vulnerable beneficiaries.  

You can also be creative with how you distribute your estate. The gifts you make in your Will can be meaningful and reflect the values you are living your life with. You can make specific gifts to specific people; give one-time cash gifts to certain people; donate to charities you feel passionate about; provide for the care of pets; or tie a beneficiary’s inheritance to specific milestones.

What is a Power of Attorney?

A Power of Attorney is a legal document that allows you to appoint someone you trust (called your “attorney”) to make decisions or act on your behalf. There are two kinds of Powers of Attorney: one for Property, which guides financial decisions, and one for Personal Care, which guides decisions about your personal care.

A Power of Attorney for Property allows your attorney to manage your financial affairs, which may include dealing with your bank and investment accounts, managing your property, paying bills, filing tax returns, and collecting money owed to you.

A Power of Attorney for Personal Care allows your attorney to make decisions about your personal care, which may include decisions relating to your health care, nutrition, shelter, clothing, hygiene, and safety, when you are unable to make those decisions yourself.

The circumstances in which your attorney can act, and the powers you give them, are important considerations when preparing these documents. A consultation can help you understand how Powers of Attorney work and what to consider when choosing your attorneys.

Comprehensive Estate Planning

As a lawyer, I always advise each person in Ontario who satisfies the age and capacity requirements, to have their own Will and Powers of Attorney. It is a key part of any estate plan and often starts a greater estate planning discussion.

As an accountant, I always highlight that an estate plan is not complete without a discussion of taxes. There are a few different kinds of taxes which must be paid upon death. I am happy to explain what kinds of taxes apply, how they will be paid, and how you can start to plan for them early.

Even a quick 30 minute consultation can bring new issues to your awareness, allowing you to be proactive in your planning and avoiding excessive legal fees, taxes, and family disagreements down the line.  

If you are interested in having a conversation to learn more about your own estate plan, please take a brief moment to book an appointment by calling or emailing me. I am always happy to meet new families and help them work through this sensitive but very important planning process. Looking forward to speaking with you soon.

Sincerely,

Nikita Gupta, CPA, JD nikitaguptalaw@gmail.com

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.