Estate Planning Legal Center – Ontario
Estate planning in Ontario involves arranging for the transfer of an individual’s estate upon their death. An estate consists of all property owned at the time of death before it is distributed according to a will, trust, or intestacy laws. An estate may contain both real property (real estate, including houses and investment properties) and personal property (all other assets, such as bank accounts, securities, jewelry, and automobiles). Estate planning typically requires consultation with various professional advisors, including lawyers, financial planners, accountants, and life insurance representatives.
Purpose of Estate Planning
Estate planning benefits individuals with both large and modest estates. The goal is to ensure that all property is distributed according to the individual’s wishes and that beneficiaries receive the maximum distribution possible with minimal delay. Specifically, estate planning allows individuals to decide who will benefit from their estate and to what extent. It also ensures that the estate will not be unduly reduced by taxes imposed on the transfer of assets upon death.
In addition to financial benefits, estate planning allows individuals to make important decisions such as:
- Appointing a guardian for minor children.
- Choosing healthcare preferences.
- Securing funeral arrangements.
Estate Planning Tools in Ontario
An estate plan is created to achieve the specific goals of the estate owner. Various tools are used to ensure the best distribution of assets. The basic instruments used in estate planning are outlined below. However, the choice of tools depends on the size of the estate, the number of beneficiaries, and the distribution objectives.
- The Will: The most common estate planning instrument, a will specifies who will inherit what property. Wills often appoint a guardian for minor children and may outline funeral arrangements. In Ontario, all wills must pass through the probate process, which can be lengthy and costly. This may result in beneficiaries receiving less than what was specified in the will, with delays in the distribution of assets. If there is no will, the estate is distributed according to the laws of intestacy, with assets divided among a surviving spouse, children, parents, or siblings, as applicable.
- The Trust: A trust is an arrangement in which a trustee manages and distributes payments or property to beneficiaries according to the trust’s terms. Beneficiaries may include family members, friends, charities, or even pets. A trust can be created during the individual’s lifetime or through a will, with property transferring to the trustee upon death. One of the benefits of a trust is that it allows beneficiaries to bypass the probate process.
- Health Care Directives: Health care directives ensure that an individual’s medical wishes are carried out if they become unable to make their own health care decisions. Health care directives, also known as living wills, typically include a health care declaration and a power of attorney for health care. These directives allow individuals to set forth their healthcare preferences for the end of life and designate a family member or friend to make decisions on their behalf.
- Financial Power of Attorney: A financial power of attorney appoints a third party to manage an individual’s finances if they are no longer able to handle their financial affairs. This could be a trusted family member, friend, or professional advisor.
Last reviewed: October 2024