Tax & Estate Planning
Planning Today for Tomorrow
Tax and estate planning helps you consider how your financial affairs will be managed during your lifetime and how your assets will eventually pass to the people and organizations that matter to you.
A well-coordinated plan can help simplify the administration of your estate, address potential tax liabilities, provide for family members and ensure that your financial arrangements continue to reflect your wishes as circumstances change.
Estate planning often involves your financial advisor working alongside your lawyer, accountant and other professional advisors.
Building Your Estate Plan
An estate plan involves more than preparing a will. Depending on your circumstances, planning may include:
reviewing your will and powers of attorney;
confirming beneficiary and successor-holder designations;
considering potential income-tax liabilities at death;
reviewing the ownership of investments and other assets;
planning for liquidity and estate expenses;
reviewing life insurance;
considering trusts where appropriate;
planning charitable gifts or bequests;
addressing business succession; and
keeping important financial and digital information organized.
Your estate plan should be reviewed periodically and following significant changes in your family, finances or personal circumstances.
Tax Considerations
Taxes can have a significant effect on the value ultimately transferred to beneficiaries.
Depending on your circumstances, tax planning may involve consideration of:
RRSP and RRIF taxation at death;
capital gains and deemed dispositions;
jointly owned assets;
registered and non-registered investments;
principal residences and other real estate;
privately owned businesses;
charitable giving; and
available rollover provisions and other tax-planning opportunities.
The objective isn't simply to minimize tax. Tax decisions should be considered together with your financial needs, family circumstances, estate objectives and applicable tax rules.
Beneficiary Designations
Beneficiary designations can play an important role in estate planning.
Life insurance policies and certain registered or insurance investment contracts may permit beneficiaries to be named directly. Depending on the type of account or contract and applicable law, this may allow proceeds to pass directly to a beneficiary rather than through the estate.
RRSPs, RRIFs and TFSAs also have important beneficiary and successor provisions that can have different tax and estate consequences.
Beneficiary designations should be reviewed regularly, particularly following marriage, separation, divorce, the death of a beneficiary or other significant family changes.
Life Insurance and Estate Planning
Life insurance can provide liquidity at a time when an estate may face taxes, debts or other financial obligations.
Depending on your objectives, insurance may be considered to help:
provide for a spouse or family members;
address estate taxes and other liabilities;
equalize inheritances among beneficiaries;
provide liquidity for a business or estate;
fund charitable gifts; or
create or preserve an estate for the next generation.
Existing insurance should also be reviewed periodically to ensure that ownership and beneficiary arrangements continue to reflect your objectives.
Planning for Incapacity
Estate planning isn't only about what happens after death.
Planning should also consider who will manage your financial and personal affairs if illness, injury or declining capacity prevents you from doing so yourself.
Appropriate legal documents vary by province and individual circumstances. Your lawyer can advise you about wills, powers of attorney, representation agreements and other legal arrangements.
From a financial-planning perspective, it is also useful to ensure that financial records, insurance information, account details and key contacts can be located when they are needed.
Complete the Financial Security and Estate Planning Check List →
Organizing Your Financial and Digital Information
An important part of estate planning is making it easier for the people you trust to locate essential information.
This can include records relating to:
bank and investment accounts;
registered plans;
insurance policies;
pensions;
real estate;
debts and liabilities;
professional advisors;
important legal documents; and
digital accounts and assets.
Review the Personal Digital Inventory →
Business Owners
For business owners, personal estate planning and business succession planning are closely connected.
Considerations may include ownership succession, funding tax liabilities, shareholder or partnership arrangements, key-person considerations and determining how business interests will ultimately be transferred.
Planning well in advance can provide more options and allow personal, family and business objectives to be considered together.
Explore Business Succession Planning →
Charitable & Legacy Planning
For clients who want charitable giving to form part of their financial or estate plan, there may be different ways to structure gifts during their lifetime or through their estate.
The appropriate strategy depends on your charitable objectives, financial circumstances, tax considerations and the type of assets being gifted.
Explore Charitable & Planned Giving →
Estate Planning in Retirement
Retirement is an important time to revisit an estate plan.
Changes in registered investments, RRIF withdrawals, beneficiary arrangements, property ownership and family circumstances can all affect how assets may eventually be transferred.
Estate planning should therefore be considered alongside your retirement-income and investment strategy rather than as a separate exercise.
Review Your Estate Plan Regularly
Consider reviewing your estate arrangements when:
you marry, separate or divorce;
a spouse or beneficiary dies;
children or grandchildren are born;
you retire;
you buy or sell significant property;
your financial circumstances change materially;
you sell or transfer a business;
your health or family circumstances change; or
several years have passed since your last review.
Regular reviews can help identify outdated beneficiary designations, ownership arrangements or planning assumptions before they create problems.
Start the Conversation
Tax and estate planning often involves several professionals working together.
Your MWFS Representative can help you review the financial and insurance aspects of your estate plan and work with your legal and tax professionals where appropriate.
Talk to Your MWFS Representative About Tax & Estate Planning →
Tax and estate-planning strategies depend on individual circumstances and applicable provincial and federal legislation. MWFS does not provide legal advice. Clients should consult their lawyer, accountant or other qualified professional regarding legal and tax matters. This information is provided for general educational purposes.
