Wills & Estate Planning

What Is Estate Planning?

Estate planning is a broad term that refers to the preparation of documents that outline the management of one’s financial situation in the event of their incapacity or death. This involves thinking about what gifts and bequests to provide to heirs, the settlement of estate taxes and debts, and guardianship of minors and/or pets. Most estate planning steps are made with the assistance of an experienced attorney. Amongst others, these include an itemization of assets and debts, reviewing accounts, tax strategizing and writing wills and powers of attorney. The most familiar to the public instruments of estate planning are the will and powers of attorney.

What Is A Will?

A will is a legal document which dictates how an estate is to be managed after the death of an individual. It does not take any legal effect until that individual died. This mean that any number of wills can be made throughout the lifetime of a person, with the most recent one made before death usually seen as the actual “last will”. A power of attorney, sometimes referred to as a living will, is a document which dictates how an estate is to be administered while the individual is still alive but incapacitated due to health or other reasons. Contrary to popular belief, estate planning is not reserved just for the super wealthy. While we tend to associate the word “estate” with a large mansion on a massive tract of land, it is usually limited to what is in most ordinary Canadians possession. Cars, bank accounts, real estate, life insurance, pensions and debts are all considered parts of an estate. There are many reasons why private individuals may wish to engage in estate planning. The most common ones are: limiting estate taxes by setting up trusts, naming guardians for living dependents, naming
an executor and power of attorney to oversee the estate.

Why Is A Properly Draft Will Crucial?

The Succession Law Reform Act dictates the specific requirements that each valid will in Ontario needs to comply with to be accepted by law, though recent changes to the legislation have relaxed this somewhat in certain situations. However, the best way to be sure that a will is acceptable is to prepare it with a professional lawyer. The authenticity of a will is determined through a process traditionally known as “probate”. This is the first step towards the administration of an estate. In Ontario, if an individual made a will, their proposed executor can apply for a “Certificate of Appointment of Executor with a Will”. If no will was made, they can apply for a “Certificate of Appointment of Executor without a Will”. Generally, the latter application is more complicated, as the court will need to be satisfied that the proposed executor has the best claim to act in that role.

What Is The Probate Process?

The probate process is the actual court-supervised procedure in which the authenticity of the will, or the proposed executer is assessed by the court. For most applications, affidavit evidence is accepted. Once the court is satisfied that the person applying is the best possible option, the certificate will be issued.

Who Should Be The Executor?

The person who is appointed as estate trustee will be responsible for locating and overseeing all the assets of the deceased. They will need to determine what was owned by the deceased and determine which items require an appraisal. Generally, small items such as furniture have a value that can be estimated, however, more expensive items such as cars or real estate will require some sort of evidentiary basis for why they were estimated at the claimed amounts. A professional estate lawyer can guide you along in this process.

Where Should You Apply For Probate?

Choosing where to apply for probate is also an important determination. There are several different methods which can be used, from where the deceased died to where most of the assets are located. If there was any real estate, it is usually best if the probate application is
started in the jurisdiction where the said property is located. The executor also bears the responsibility of paying off any debts that the deceased held at the time of their deaths. While the actual debts are paid off from the estate, sometimes this is more difficult than it sounds. For example, if a deceased owned a home but had very little on their bank account, it may not be possible to pay off a high credit card bill. In certain situations, the executor may simply pay off the debt personally and compensate themselves when the non-liquid assets are sold. Finally, the executor is also responsible for filing the final personal income tax returned on behalf of the deceased. It is usually a good idea to seek professional advice as soon as possible, so that the filing is not late. After the inventory of the estate has been taken, the value of the assets calculated, and taxes and debts paid off, the executor will then proceed to distribute the assets.

What About Probate Taxes?

Each application to the court carries a so-called estate administration tax, popularly referred to as a probate tax. While there are applicable deductions and exceptions for small estates, the probate tax will usually equal 1.5% of the net value of the estate. Using proper estate planning strategies can cause this to be avoided. One of the most common tactics is for spouses to be placed on the title of their real estate property as “joint tenants”. A joint tenancy is a legal mechanism in which the parties agree to own the entirety of the asset together, rather than in percentages. For example, if a husband owned a house prior to marrying his wife, and it is his intention that she owns it after his death, he can place her on title as a joint tenant. Now they both own the entirety of the house together. If the husband dies, the wife can inform any lawyer practicing real estate that the husband died, and the lawyer will register a so called “survivorship application” on title. This informs the Land Registry Office of Ontario that one of the owners has died and the asset now belongs entirely to the surviving owner. Probate taxes do not apply because the asset was not inherited but passed to the wife by right of survivorship.

Contact A Lawyer Today

At Empel Law Professional Corporation, our lawyers have over a decade of experience in Wills & Estates Planning. Call 416-500-1937 to speak to a lawyer immediately.

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Arkadiusz J. Empel urodził się w Katowicah. Jako dziecko emigrował do Kanady, razem z rodziną, lecz wrócił jako student aby ukończyć Pracę Magisterską w Krakowie. Przez swoją pracę z polonią w okolicy Toronto utrzymał władność w swojim języku ojczystym. Jeżeli Państwo życzy się skonsultować prosto z adwokatem Polski, proszę przedzwonić na numer 416-500-1937.