How To Prepare
Who will act as your estate trustee?
This is the individual who is named in your will to be appointed to administer the will and to ensure that your final wishes are respected. You should give this question considerable thought and choose someone who you consider to be trustworthy and responsible, and usually of a similar mind with respect to the disposition of your estate. It can be a spouse, often a close friend or family member; however, if the estate is complicated you may want to name a lawyer, certified general accountant or professional trustee. You may choose to have more than one person act as co-trustees, and you should also consider an alternate trustee, in case your primary trustee predeceases you or is unable or unwilling to act.
Who will act as guardian of minor children?
Normally, if one parent passes away, the children will be cared for by the other parent. However, in some circumstances both parents may die at the same time, or the other parent may, for a variety of reasons, be unable to care for the children. As caring for children is a serious responsibility, you should discuss this decision with your intended guardian(s) and alternate guardian(s) before making a decision.
Trusts for minor children
Many people want to leave their estate to their children, but what happens if the children are still minors at the time of their parent’s death? You can leave your estate to children and grandchildren in trust, and specify that it is to be released to them when they are adults of a particular age, or in stages as they mature. You should consider at what age it would be appropriate for your children to receive your estate. You may want your estate trustee to manage your estate in trust in the mean time, or, depending on the value and complexity, you may wish to name a professional to manage the trust.
Funeral arrangements
You may want to specify your preference for burial or cremation, as well as naming any funeral home you have made pre-arrangements with and any cemetery you intend to be placed in or may have already purchased a plot in. It is a good idea to discuss your wishes with your estate trustee as that will be the person who makes decisions regarding your funeral arrangements.
Tax considerations
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:
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owning property as joint tenants (i.e. real estate and bank accounts)
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designating beneficiaries of RRSPs and life insurance
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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.
