It has been said that the two certainties in life are death and taxes.  It is therefore no surprise that planning for these certainties has become an increasingly popular topic.  Typically, planning for death and taxes involves executing a last will and testament (i.e., a will), which is a legal document that designates how your assets will be managed and distributed after death.

It can be daunting to think about one’s own death and how to divide assets among loved ones.  But there are several reasons why it is imperative to have a valid will in place, including the ability to choose a guardian for one’s minor children; protecting and planning for minors’ inheritance; avoiding unnecessary headaches for family members; making desired charitable donations; and minimizing probate fees and taxes.  Further, planning ahead provides the ability to choose a trusted executor/trustee to carry out one’s wishes.  A trust company, like Cidel Trust Company*, can be appointed as an executor/trustee to reduce the burden and potential liability of estate administration on family and friends.

Just as importantly, making a will allows an individual to choose the persons or organizations they wish to leave money to and in what amounts.  However, if an individual dies intestate (i.e., without a will), the distribution of their estate is governed by the specific intestacy rules of the province in which they are domiciled, which rules may not be on par with the person’s wishes.  In Ontario, for example, the laws on intestacy are set out in Part II of the Succession Law Reform Act.  The Succession Law Reform Act provides for a list of individuals, in hierarchical order, to whom the law presumes the deceased would have wanted to leave money.  For example:

• if you are married and have no children at the time of your death, your spouse will inherit your entire estate;
• if you are married with children, your spouse will first inherit a “preferential share” of the value of your estate and the remainder of the estate (if any) is divided among your spouse and children (how the remainder is split depends on the number of children you have).  The regulations made under the Succession Law Reform Act were recently amended to increase the value of a surviving spouse’s “preferential share” from $200,000 to $350,000 where a deceased died intestate on or after March 1, 2021;
• if you are not survived by a spouse or any issue, your estate is distributed to your closest living blood relatives (for example, parents would take priority over all other living relatives. If your parents are not alive, your siblings will inherit your estate in equal shares. If your siblings are not alive, your nieces and nephews, etc.); and
• if you have no next of kin, your estate will escheat to the Crown (i.e., your property will become the Crown’s property).  This is quite rare.

In the event of an intestacy, common-law spouses do not have the same statutory rights to an estate as married spouses.  However, while the law provides a roadmap as to who should receive an intestate person’s estate or a share thereof, a common-law spouse, an unhappy family member, or a multitude of other persons can nevertheless come after the estate and fight for a piece of the pie.  It is therefore best to make a will and avoid the costly and time-consuming litigation that would ensue in the case of an intestacy.

Many difficulties can arise because of insufficient or improper estate planning.  Making a will and ensuring one’s estate planning is up to date can prevent a myriad of adverse outcomes after death, including complicated estate administration and costly litigation.  If you have any concerns or questions about the current status of your estate planning, please contact your Wealth Consultant to discuss your options.

* Please contact your Wealth Consultant to learn about how Cidel Trust Company, a federally licensed trust company, can assist with the administration of your estate.

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There has been an unprecedented transfer of wealth from one generation to the next in recent years.  In addition, people are living longer and, more and more, we are seeing complicated estates as a result of individuals and families moving to or owning assets in different jurisdictions.  As a result of these new realities, there is an ever-increasing need to have appropriate strategies in place to address concerns of conveying wealth to the next generation, aging, and maintaining a family or business legacy.

At Cidel, we are committed to empowering our clients with practical knowledge in the areas of trusts, estates, capacity, and succession planning to allow clients to navigate through these sensitive considerations.  Wealth Matters – Our Insights will bring together trusted legal, accounting, and other professionals to discuss interesting topics that are relevant to you.

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