There are a number of essentials to consider when putting an estate plan into place. These include a will, powers of attorney for both property and care and beneficiary designations.

In addition, consideration should be given to estate freezes, shareholder agreements and the uses of various trusts.

Any estate plan should also consider the impact of the Family Law Act in Ontario and equivalent legislation in other jurisdictions.

Wills - Every adult, single, married or living common-law should have a current will. If there are assets that do not require a court of jurisdiction approval then two wills should be executed in order to minimize the impact of probate on such assets as private companies and other personal assets. If there is property in another jurisdiction (such as a Florida condo), a local will for that jurisdiction should be prepared. This avoids probate in Ontario as well as the other jurisdiction and also simplifies the estate process as foreign courts do not always deal expeditiously with foreign wills.

Powers of Attorney (POA) – There are two POAs that should be prepared. The first deals with property in the event that the individual is no longer willing or capable to handle their own business affairs. The second is for health care and can deal with matters from nursing to long-term care to end-of-life issues. The attorneys can be separate individuals for each power as desired by the individual.

Beneficiary Designations – Every life insurance policy, RRSP, RRIF and other pension plan should have a named beneficiary or beneficiaries. It can be a trust such as an insurance trust but in any event should never be the “estate” since that will bring the proceeds under the authority of the probate system.

Estate Freeze – These are undertaken to lock-in the value of assets so that future growth accrues to other generations and limiting the tax on death. When economic circumstances permit, sometimes it is beneficial to undue these freezes, sometimes referred to as a refreeze or thaw. These freezes can also be undertaken to achieve income-splitting.

Shareholder Agreements – There should always be shareholder agreements in place when there is more than one shareholder of a corporation, even when it is all family. Drafting of shareholder agreements should be coordinated with the drafting of the will to ensure consistency as we have often seen agreements that have specific provisions that are in conflict with provisions in the will.

Trusts – Trusts can be used to hold property in order to minimize probate or capital gains tax and can include family trusts, cottage trusts and bare trusts. Discussion with tax advisors before putting these into place is essential.

Family Law Act – One of the basics of the act is the equalization of net family property (NFP). The valuation of NFP is either the date of separation or the day before the date of death. Equalization is not a division of assets as may be the case in other jurisdictions but is the payment of the amount calculated. On the passing of a spouse the survivor has the option to accept the provisions of the will or elect to take the equalization amount. This election must be made within six months of the date of death (although a court can grant an extension) and is only available to a married spouse and not common-law. The failure to make the election will deem the will to take precedence.