How proper planning can help protect your assets

Mary Ann Donahoe, Tax Manager with MRSB Tax Services, provides some insight into the 'why' and 'how' of planning your Will.

Your Last Will and Testament is one of the most important steps toward ensuring your family and assets are protected for the long-term. 

For many individuals, business owners and even parents, planning a Last Will and Testament is the last thing on your mind. You are busy and, in all likelihood, will have plenty of time to put your financial affairs in order for the benefit of your family. Especially for those in their 20s and 30s, a Will can seem like a slightly morbid document that only bears thinking about once middle age is in full swing. But planning the transfer of your assets and making your final wishes known should be a key component of tax and retirement planning for any individual, regardless of age or financial standing.

One of the biggest selling points (if it can be called that) when pitching the idea of a Will to the younger generation is that if you sit on the decision and the worst does happen, the courts will be the ones to decide how all of your assets are distributed. For example on Prince Edward Island, your spouse automatically receives a third of your estate while your children receive the remaining two thirds. Other Canadian provinces have similar laws. This scenario can cause significant tax issues and can also leave your spouse without planned living or retirement funds and possibly without a home. 

Conversely, having a say in how your assets will be distributed, how your spouse will be supported, who will care for your children and who will inherit your business is important for your present peace of mind as well as the future of your loved ones. A properly structured Will allows for maximum tax planning opportunities available to the executor and can result in significant tax savings. Speaking with a tax advisor is a smart move, as they can take you through all the necessary steps and you can reap the tax benefits of being an early planner.

Assuming you want to get started with your Will planning, or that you would like to give what you've already drafted up a second look, here are some key considerations to keep in mind:

  • Name an executor and a secondary executor. This is critical as you want to designate the right person to follow through on your wishes. Whether family, friend or trusted advisor, your executor should have the knowledge and compassion to be able to deal with any sensitive matters that arise
  • Take advantage of the opportunity to transfer property to a spouse, allowing for a deferral of tax on your property until the passing of both spouses
  • Consider the use of a spousal trust to effectively transfer individually owned property
  • Ensure that your executor has the ability to liquidate your assets if this is determined beneficial
  • Name a guardian for any children under the age of 18 so that they will be cared for until they reach the age of majority
  • Consider a Trustee to manage any property transfered to children until they reach an age where they can responsibly manage their own affairs (preferably 25 - 35 years of age)
  • Consider any specific bequests or donations you may wish to make to individuals, entities or charities
  • If you are a business owner it is critical that your Will work in conjunction with othe guiding legal documents such as shareholder(s) agreements, family trusts, etc.
  • Consideration should also be given to Power of Attorney and health care directives
  • Finally, your Last Will and Testament should be reviewed periodically to ensure it is up to date, reflecting any recent changes that may have happened

The cost of a Will is usually reasonable and the benefits far outweigh the potential legal costs of not having one. It will take some time and a little effort on your part, but planning your Last Will and Testament is just another step toward ensuring you are ready for whatever the future may bring. Whomever you choose to help draw up your Will, they should be knowledgeable enough to provide advice on estate matters and patient enough to answer all of your questions.

Remember, it can be too late, but it can never be too early.


Have a question about tax planning or preparing your Will? Contact our Tax Services team here.