Estate planning basics, on the Sunday Reads.

The 2025 Canadian Financial Summit took flight this past week. It features presentations from a who’s who in the Canadian financial education space, and then it includes a few also -rans such as me, Dale 😉 the creator of Cut The Crap Investing and Retirement Club. My presentation covered the most common mistakes in retirement. In the mix of the common mistakes was insufficient (or no) estate planning. That can begin with not having a will of course. But a will is not an estate plan. I’m certainly not an estate expert but after a few hundred hours of research I put together a Zoom presentation for Retirement Club. The Zoom call outlines the estate planning basics. We will have a follow up presentation in December featuring an estate expert. We’re looking at some of the estate planning basics on the Sunday Reads.

Here’s a crisp definition: An estate plan is a set of legal documents and strategies that outline how your assets and affairs should be managed and distributed in the event of death or incapacity. Typically, an estate plan includes a Will, Power of Attorney for Property, Power of Attorney for Personal Care and beneficiary designation forms.

Here’s a very good estate outline PDF from RBC. Here’s a list of the documents that could be part of your estate plan.

And yes, be sure to read The common mistakes in retirement.You can also sign up for the Canadian Financial Summit.

More than a financial plan, it’s a life plan

An estate plan is not just an end of life plan when you control your assets and wishes from the grave. The estate plan is shaped and takes shape while you’re alive. In fact you’ll be acting upon and executing your estate plan while you’re very much alive.

Die without a will and you can be sure that all hell will break loose. Pun intended. Live and die without proper estate planning and you’re likely creating the same kind of mess.

One thing I’ve noticed consistently is that money makes people crazy. Money and possessions can rip families apart. Proper estate planning is a form of conflict resolution. You might stop the fights before they start. Communication with family and other beneficiaries is key. You can do your best to manage expectations, egos, jealousies and existing conflicts.

The break-up-the-family cottage

The family cottage might provide the best example for why we need honest and open family conversations. The transfer of the cottage to a shared arrangement between siblings can fail on so many fronts, from the financial capabilities to the clash of personalities. Of course, not all cottage arrangements read like a horror-story, but it’s likely more the norm.

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For example, can you really leave a cottage to be split evenly between your three children when two of them are not on speaking terms, and another does not have the financial capability to cover the cottage maintenance costs?

Family meetings might quickly reveal if a shared arrangement is possible or even wanted. Communication will be crucial across the entire estate planning process.

The estate planning timeline

Here’s a post on the estate process timeline using Ontario as an example.

Create a will with estate planning / death / executor files for probate / probate granted / executor executes the directives of the will / sells assets, distributes assets and pays debts / files tax return and pays outstanding taxes / closes estate file

Keep in mind an estate can remain open for 3 years. Think of it as a business that can be operated for tax efficiency.

It’s important to consider which assets are subject to probate, and how you can avoid probate (when that is advantageous).

When creating your will and estate plan

Aaron Hector of Tier Wealth begins the process (with clients) using a very simple but effective exercise. Of course listing all of your assets and debts is one of the first steps.

Aaron discusses his 3-column exercise in this Wealth Barber YouTube video.

It starts with a crisp asset holdings net worth statement:

All bank accounts
All investment accounts
All properties
All vehicles

List the account, list the balance, and for each asset . Make three columns.

You can quickly get a picture of your asset holdings, and if they arranged properly. Will you see a tax free transfer? Do you have the proper beneficiaries to enable the tax-free hand off? Assets held individually end up in your estate will be subject to probate fees and perhaps other taxes. Can you minimize probate fees if those fees are based on the value of your estate?

Here’s a breakdown of probate assets and non probate assets.

And here’s a link on ‘probate planning’ that will also list the probate fees in each province.

But here’s a taste …

Probate avoidance strategies include gifting, joint ownership of assets, proper beneficiary designations, living trusts and multiple wills.

Your estate needs assets to pay the bills

Keep in mind that your estate will need assets available to cover financial obligations. That can range from estate fees to capital gains on the family cottage, other properties and investments. Given that, you’ll need to feed the estate the appropriate assets that will be subject to probate. That liquidity can be made available from property in the estate, insurance policies, plus savings and investment amounts. Planning will ensure you have enough, while not exposing too much to unnecessary probate fees.

Know how your assets are treated

In order to minimize taxes, provide security for yourself and your spouse while you’re enjoying retirement, plus enrich your heirs and charities to the greatest degree, you need to know how your assets are treated, while you’re alive and after you pass.

RRSP / RRIF / LIF / TFSA Accounts

With a successor holder or successor annuitant beneficiary form, the full value of those registered accounts can be transferred to your spouse in tax free fashion. The funds will simply be added to the value of their registered accounts. For example, a $200,000 TFSA transfer to a spouse who has a $150,000 TFSA now has a $350,000 TFSA. They have an increase in their contribution space. They can carry on with that $350,000 TFSA. It’s a one time boost.

But if a TFSA amount is transferred to a non-spouse by way of a beneficiary designation, the amount goes tax free (to your child for example) but will be removed from the land of TFSAs. The amount can continue on in a taxable environment.

If the beneficiary for RRSP / RRIF / LIF is a non spouse transfer the funds are moved tax free. That said, the full amount is considered income on the deceased final tax return. The estate will owe the taxes on the FULL AMOUNT. *See estate needs liquidity section, ha 🙂

This can create a challenge for the estate and the executor if the estate does not have other assets available to pay the income taxes.

In Quebec, you can generally only name a beneficiary in your will, so you cannot appoint beneficiaries for an account directly with a financial institution.

Retirement cash flow considerations

Given that RRIFs, LIFs and TFSAs can go to the spouse in tax-free fashion, that provides a certain level of security for a surviving spouse. That said the deceased spouse’s pension may disappear, the OAS is gone, you may also lose the full CPP or a partial amount. Even upon the death of a spouse the “combined” CPP amount is capped at the full payment CPP available at age 65. Also, income splitting is no longer available.

The retirement cash flow plan has to consider the reduced income and less favourable tax treatment.

When conducting your estate and cash flow planning you will have to balance taking care of your heirs and protecting yourself and your spouse. You might keep a larger RRIF into your late 80’s and early 90’s, even though it’s very tax inefficient for the estate. Remember the last survivor’s RRIF is taxed in full at the estate level.

Running a retirement cash flow calculator will help you balance estate tax efficiency with preserving enough income. We study risk and cash flow scenarios extensively at Retirement Club. You’ll learn how to use free-use retirement calculators. Or we can recommend an advice-only planner or three who can help you with the cash flow plan and the greater financial and life plan.

Taxable accounts

If a taxable investment account is joint with right of survivorship (JWROS) the account transfers outside of the estate to the surviving joint account owner. Any capital gains obligations can be rolled over to the surviving spouse. They don’t have to settle the capital gains, but may choose to do so for all or a portion.

If the surviving joint owner is other than the deceased’s spouse, the deceased is deemed to have disposed of their interest in the underlying investments in the account at fair market value (FMV), immediately before their death, for income tax purposes. Any resulting capital gains or losses are taxable and will be reported in the deceased’s tax return(s).

Having a child joint on a taxable account may not avoid probate due to recent legal challenges.

With ‘tenants’ in common the taxable account has multiple owners and specific owner amounts. The same rules as spouse or non spouse (as above) apply.

The home as Primary residence

The primary residence is not subject to probate fees if it is jointly owned (with a right of survivorship) or held in a trust. However, if the home is solely owned by the deceased it is subject to probate.

There are no capital gains of course on a primary residence, but the cottage and other investment properties will be subject to those capital gains. Trusts may be able to help you manage those capital gains.

On another note, be careful when adding children as joint holders on properties and taxable investment assets.

Jason Heath offered more on the joint designation risks at MoneySense.

There’s so much more to estate planning

This blog post covers some of the essentials. And hopefully it demonstrates how important it is to embrace estate planning. We’ll go over estate planning in more detail on our December Zoom call at Retirement Club. And again, we’ll have an expert deliver that presentation. We call on experts for many topics from annuities, insurance, reverse mortgages and HELOCs, the Purpose Longevity Pension Fund and more.

Use the Contact Dale link at the top of this page if you’d like more information on Retirement Club, or if you’d like to sign up. You can join that December Zoom Call, and then continue on with the new group that sets sail in 2026.

You’ll have immediate access to our online community space, our private island where we learn, share and chat.

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