Katherine Al Haddad

By Katherine Al Haddad

April 8, 2016

Financial Security

Estate Planning: 5 Essential Steps

Article revised on 27 July 2017

Estate planning is important for everyone who wants to have their assets passed on to their heirs as simply as possible, minimizing the tax consequences associated with the legacies.

Here are the 5 essential steps of good estate planning:


1. Gather your documents

Gather all the official documents your heirs may need in order to settle your affairs after your death:

  • Investment statements (bank, RRSP and TFSA statements, etc.)
  • Mortgage statement and ownership certificate
  • Loan statements (line of credit, auto loan, personal loan, credit cards)
  • Pension fund statement
  • Tax return
  • Existing will
  • Life insurance policies
  • Marriage contract or cohabitation agreement/ divorce decree

2. Prepare an inventory of what you own and your debts

An inventory is like a snapshot of your financial situation at a specific moment in time. It will give your heirs detailed information on what you owned and what you owed at the time of your death. Update it as often as necessary.

3. Determine your objectives

What do you want to leave your loved ones, and how do you want your assets to be bestowed (in full as of your death or by means of a trust that will allow payments to be issued over time)? At this stage, a number of factors have to be considered in order to reduce the tax bill associated with the transfer of assets to heirs. For example, it is preferable for you to transfer your RRSPs to your spouse, rather than your children. That’s because if you transfer them to your spouse, the full RRSP value will be retained in spousal RRSPs. If you transferred them to your children, they would be fully taxable for the year of your death.

4. Express your wishes in writing

End-of-life care, organ and tissue donation and funeral options are all things you will have to make a decision about sooner or later. Do your loved ones a favour: Spare them from having to make these difficult decisions when the time comes.

5. Prepare a will and a mandate in anticipation of incapacity

These two documents are essential to good financial planning. If you die without a will, the rules provided by law are those that apply. For example, your former spouse, from whom you have not gotten a divorce, will remain your heir and be entitled to a portion of your assets, while your new common-law spouse will not be entitled to anything. Invest a few hundred dollars in preparing a will, and you will have peace of mind. These two documents can spare your loved ones a lot of hassle when you die or become disabled. Contact a notary or a lawyer for help in drafting them.

Regardless of your age or the size of your estate, it’s in your best interest to develop an estate plan and to ensure that your last wishes are respected and your assets are passed on as you would like with the lowest possible amount of income tax payable and with no problem or delay for your heirs.


Note: This article is intended for information purposes only and should not be construed as legal, financial, tax or other advice. The circumstances or factors may vary depending on your individual situation. Before taking action, we encourage you to consult a professional. La Capitale Civil Service Insurer or La Capitale Insurance and Financial Services shall not be held liable for any consequences arising from any decision taken based on the content presented in this article.

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