Estate planning is more that simply preparing a will.  It involves balancing issues such as: minimizing probate taxes, providing for dependents, creating trusts for minors, minimizing taxes; designating beneficiaries for RRSPs and life insurance, appointing guardians for minors and an equitable division of your estate.

Everyone should have a will.  If you die without a will (“intestate”), then your estate will be divided according to the governing law.  This division may be quite different then your wishes.  Also, someone will have to apply to be the administrator of your estate.  If no one applies to become the executor, a government agency may become the administrator.  A government agency will also decide who will become the guardian of minor children and their property. 

PROBATE TAX

Contrary to what many people believe, there are no “death taxes”.  However, when a person dies many (sometimes all) of their assets are deemed to have been sold as of that date.  This may trigger taxes, such as capital gains.  Sometimes this is confusingly referred to as a “death tax” but it is really a deemed disposition of assets.

Any assets that pass through the estate are subject to probate tax.  For this reason, part of an estate plan may entail avoiding certain assets from passing through the estate.  This can be done in a number of ways such as: owning property as joint tenants (i.e. real estate and bank accounts), designating beneficiaries of RRSPs and life insurance and provided gifts or creating trusts while you are alive.  Although there are advantages to avoiding probate tax, often the advantages of having assets pass through your estate may be greater.  You will need professional advice when balancing these competing interests.

TRUSTS

If you leave assets to minors, then the Government Public Trustee, will administer their assets until they reach the age of majority (nineteen).  Obviously, most parents do not want this.  For one, they usually don’t want a government agency to control the children’s inheritance.  Secondly, they usually don’t want their children to have access to their inheritance at such a young age.  For these reasons, parents and/or grand parents, will often establish an inter vivos (trust created while they are living) or a testamentary trust (trust created in their will being effective after one’s death).