Wills & Estate Planning

The deemed disposition at death

When a Canadian resident dies, the Income Tax Act treats them as if they disposed of all their capital property at fair market value immediately before death. This triggers any unrealised capital gains and creates a final tax bill on the terminal return — often a substantial one.

The major exception is rollover to a spouse or common-law partner: capital property left to a surviving spouse transfers at adjusted cost base, deferring the tax until the spouse disposes of the property (or dies).

Registered accounts (RRSP, RRIF) without a surviving-spouse rollover are fully included in the deceased’s income in the year of death — a frequent source of unexpectedly large terminal tax bills.

Wills

A valid will is the cheapest, highest-leverage estate-planning document there is. It names an executor, distributes your assets, names guardians for minor children, and avoids the lengthy intestacy process. Each province has its own formal requirements; a will valid in one province is generally recognised across Canada.

Some assets pass outside the will:

• Registered accounts with a named beneficiary (RRSP, RRIF, TFSA)
• Life insurance with a named beneficiary
• Jointly-held property with right of survivorship

Reviewing beneficiary designations is as important as updating the will itself.

Probate

Probate is the court process that confirms a will is valid and grants the executor authority to act. Provinces charge probate fees on the value of the estate; Ontario has the highest at roughly 1.5% on amounts over $50,000. Strategies to reduce probate (joint ownership, beneficiary designations, multiple wills for business assets) are common but carry tradeoffs.

Powers of attorney

A power of attorney lets someone act on your behalf while you are still alive but unable to manage your own affairs (incapacity, illness, absence). Most provinces distinguish between a power of attorney for property (finances) and a personal directive / advance care directive (medical decisions). Both should be considered alongside the will.

When to involve a professional

DIY will kits work for simple situations (no business interests, no blended family, no minor or disabled beneficiaries). Beyond that, the few hundred dollars to engage an estates lawyer is one of the better investments a Canadian adult can make.