Introduction
Estate planning isn’t just about what happens after you die—it’s a vital part of protecting your loved ones, ensuring your wishes are followed, and managing your wealth responsibly during your lifetime. Yet, more than 50% of Canadians don’t have a will.
Whether you’re 30 or 70, this guide breaks down what every Canadian needs to know about estate planning—and how to avoid costly mistakes.
1. What is Estate Planning?
Estate planning involves:
- Writing a will
- Appointing powers of attorney
- Creating health directives
- Minimizing estate taxes
- Choosing beneficiaries
- Possibly setting up trusts
It’s not only about money—it’s about control, legacy, and peace of mind.
2. The Will: Your Estate’s Cornerstone
A will is a legally binding document that:
- Names an executor
- Outlines asset distribution
- Assigns guardianship for minor children
- Includes instructions for charitable giving
Update your will after:
- Marriage or divorce
- Birth of a child
- Major asset purchases (property, business)
- Death of a beneficiary
Without a will, the government decides how your estate is distributed, which may not align with your wishes.
3. Power of Attorney and Health Directives
You need two types:
- Financial Power of Attorney: Manages banking, bills, and taxes if you become incapacitated
- Health Care Power of Attorney: Makes medical decisions on your behalf
Pair these with a living will, which expresses your healthcare preferences, such as Do Not Resuscitate (DNR) orders.
4. Beneficiaries: Keep Them Updated
Many assets transfer directly to a named beneficiary:
- RRSPs
- TFSAs
- Insurance policies
These designations override your will—so review and update them regularly.
5. Use Trusts for Flexibility and Control
Trusts can:
- Protect a child’s inheritance
- Reduce probate fees
- Provide income to dependents with disabilities
- Minimize taxes
Popular options include:
- Testamentary trusts
- Spousal trusts
- Henson trusts for disabled dependents
6. Minimize Estate Taxes
Although Canada doesn’t have an inheritance tax, your estate pays capital gains tax on assets like real estate and investments.
Tax-saving strategies include:
- Gifting assets during your lifetime
- Making charitable donations
- Naming a spouse as RRSP/RRIF successor
7. Work with a Professional
Estate law is complex and varies by province. A professional can:
- Ensure your documents are legally valid
- Recommend tax-efficient strategies
- Act as executor or trustee if needed
Conclusion
Estate planning isn’t morbid—it’s responsible. Protect your family, preserve your assets, and leave a legacy on your terms. The earlier you start, the more flexibility you have.
