Spring Cleaning? Start With Your Estate Plan

Spring has sprung! If improving your financial well-being is part of your spring cleaning, a great place to start is with your estate plan. A comprehensive plan ensures your assets are distributed according to your wishes, while helping to maximize the legacy you leave behind.

If you already have an estate plan in place, here are five questions to ask that may prompt a review:

1. Does my plan promote efficient administration and limit unnecessary expenses, such as taxes and fees?
   
2. Will my plan minimize family effort—or even potential conflict?
   
3. Are my assets protected from potential liabilities, such as former spouses or creditors?
   
4. Do I have safeguards in place to allow my family to make financial and healthcare decisions if I am unable?
   
5. Can my family maintain their current lifestyle if I am no longer able to contribute?
   

Minimizing Taxes & Fees

A key goal of many estate plans is to reduce taxes and other fees. For Canadian income tax purposes, most assets, including real property and shares, are deemed to be disposed of immediately prior to death and may be subject to tax, except where certain exceptions, such as spousal rollovers, apply. Some provinces also charge probate fees, which can vary significantly.

Additionally, Canadians holding significant U.S. situs assets, such as shares of U.S. corporations or U.S. real estate, may need to plan for potential future U.S. estate tax. For now, there is good news: the U.S. estate tax was scheduled to “sunset” as of January 1, 2026, reverting to between US$5 million and US$6 million per person, indexed for inflation. However, under the One Big Beautiful Bill Act, the U.S. estate tax exemption was “permanently” increased to US$15 million per person (US$30 million for married couples) as of January 1, 2026, with future indexing for inflation. Of course, no tax-related legislation can truly be considered permanent, but the increased exemption provides near-term planning certainty for high-net- worth Canadians with significant U.S. situs assets.

While taxes and fees can create a substantial obligation for many estates, careful planning can help reduce or defer them. This may be as simple as arranging bequests differently, using life insurance to help cover tax liabilities or, for business owners, leveraging tools such as an estate freeze or the Lifetime Capital Gains Exemption to ease succession planning.

It’s More Than Just Finances

A comprehensive estate plan goes beyond maximizing the estate value passed to beneficiaries. It can also ensure fairness among heirs or protect those who may need guidance in managing assets. Trusts, for example, can help preserve assets for beneficiaries who cannot manage them independently or prevent access by creditors. By planning ahead, you can create a lasting foundation that reflects your values and helps your legacy endure across generations.

Why Not Make Estate Planning a Priority?

Like many things in life, estate planning can easily fall down the priority list. For some, the subject feels unsettling, perhaps a reminder of our own mortality. For others, it simply gets lost in the bustle of daily life. Yet establishing a basic plan, and keeping it updated as circumstances change, is one of the greatest gifts you can give to your loved ones.

Being familiar with the many aspects of your financial situation, we can provide guidance, counsel or recommendations for experts in the field to assist with your estate plan.

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