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Estate Planning in Canada: Expectations vs Reality

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For most people in the world, there are two main reasons for estate planning. These reasons include asset distribution and liability control. First, you want to accordingly apportion your wealth to your respective desires as a person. While doing this, you do not want a considerable percentage of it to be lost to taxes. Also, you do not want your wealth to be used without your control. These reasons stay the same for people in Canada.

You must understand that almost the same rules guide the Canadian estate planning industry as other countries. However, there are a few peculiarities. You need knowledge of these unique circumstances to limit your estate’s liability to the barest minimum.

In this article, you will be exposed to the concept of estate planning as it applies to Canada and how professionals like Insurance Direct Canada can help you make the best out of your plan.

What are the Expectations of People Living in Canada on Estate Planning?

The following are the expectations people have when they plan their estate in Canada:

The need to protect the interests of the people depending on them – People plan estates to legally ensure the financial security of the people that rely on them, especially their children. In estate planning, people appoint guardians to ensure their children access the financial support needed in their absence. Furthermore, people expect their estate administrators to prepare the coming generation for the transfer of wealth as when due.

The need to safeguard their assets – People get involved in estate planning to protect their financial properties when they are incapacitated and unable to make crucial decisions. In their place, an appointed person or attorney of the law makes these decisions to ensure the continued security of these assets. These individuals are also expected to continually safeguard the owners’ interests in these cases.

The need to save money and time during wealth transfer – People plan estates for cost-effectiveness. It is a common expectation that estate plans would reduce time and money spent on paperwork during asset transfer processes.

The need to handle financial contingencies – People also expect their estate plans to cater to financial situations they were unprepared for. In these situations, they expect the plans to assist them in reaching safe compromises between saving and settlement.

The Reality of Estate Planning in Canada

Now that you understand the potential benefits of estate planning let’s examine the current realities in Canada and how they influence your expectations.

The reality of the disposition tax is that your estate assets attract a certain amount in tax when you dispose of them, and this amount is called disposition tax in Canada. You are mandated to pay a certain amount of tax after voluntarily or involuntarily disposing of assets worth more than a thousand dollars.

The Estate planning class – Estate planning is not just for the wealthy, as against the stereotype. Middle-class individuals also have the option of controlling their asset distribution in Canada. As long as you have estate assets, you could use estate planning as a Canadian (or non-Canadian).

The Deference of disposition tax – Ideally, asset disposal attracts a capital gains tax of 5, 10 or 15% depending on the time frame of asset ownership. Also, the deceased’s property is considered sold at the fair market value of the death. The disposition tax gets deferred when you transfer your asset to a surviving spouse or a spousal trust. Essentially, it would be best if you had an estate plan to avoid the cost of probation and the corresponding tax costs.

Distribution of the deceased property – You need a documented will to determine your asset distribution after your death. In the absence of a will, the Canadian province where you live decides how your assets are distributed.

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Estate Planning in Canada: Expectations vs Reality 2

How to Plan an Estate in Canada?

The best estate plans in Canada are developed with the help of experts. For instance, you will need a lawyer, financial analysts, financial security experts, insurance brokers and notaries. Although some tools and websites offer do-it-yourself plans, you are always better off employing professionals like Insurance Direct Canada. For an optimal plan, the following strategies are essential;

Picture the kind of asset transfer you want: Before taking any estate planning steps in Canada, there are essential questions to ask yourself. For instance, what are the assets you would like to transfer? Who are the people you intend to transfer these assets to?

Gather and Document the Assets – You should start the paperwork in earnest now that you know the assets you intend to transfer. The documentation should cut across areas like your bank account, insurance policies, retirement accounts, etc.

Create the Necessary Documents for the Asset Transfer – The paperwork would not stop at the ones listed above. There are certain documents you need to create with the help of experts. Attesting to these documents legalizes your asset transfer process as soon as due.

Necessary Estate Planning Tools You Need in Canada

As a Canadian or someone that stays in Canada, you need to have the following documents in your estate plan at the very least;

A will – The will is the legal document containing your estate asset distribution details. You determine what percentages of your assets go to each venture and stakeholder in your will. Without the will, these decisions are left to the discretion of a court administrator employed by your family.

A Trust – These are individual entities that allow you to legally transfer your assets to a beneficiary when they are allowed/ready to receive them. A trust could be a living trust whose duties are discharged while alive or a testamentary trust that starts to act after you die.

The power of attorney and living will – What if you are incapacitated and can’t make objective decisions about your assets? This is where you need the power of attorney and a living will. Any individual with this power can make decisions on your behalf in these instances, especially regarding your healthcare and financial security.

Finally, it would help if you had an insurance plan to facilitate your asset transfer process when the need arises.


Finally, you may want to set specific criteria for activating the provisions in your estate plan. There are slight differences in the requirements for finalizing an estate plan in some provinces like Quebec. You could use the help of an expert to navigate this process. It would help if you remembered the importance of updating your estate plan document. You could have reasons to alter your decisions and revisit the distribution.

To ensure maximum legal compliance and a total effect of your plan when due, let Insurance Direct Canada – a team of estate planning experts, help you with professionalism and ethical standards. Please don’t take our word for it. Try it out yourself, and see what a good estate plan is like.

You can take a look at our library of review articles for more information on the good companies in Canada that can help you create an Estate Plan: Canada Life review, Sun Life Canada review, TD Insurance Canada review, RBC Insurance Canada review, etc.

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  1. […] For most people in the world, there are two main reasons for estate planning. These reasons include asset distribution and liability control. First, you want to accordingly apportion your wealth to your respective desires as a person. You must understand that almost the same rules guide the Canadian estate planning industry as other countries.  […]


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