Estate Planning in Ontario
A will says who receives what. It rarely says what the estate will owe, where the cash will come from, or whether the people left behind will think it was fair.
An estate plan is more than a set of legal documents. It also has to account for the obligations left behind, the assets available to meet them, and the people expected to carry it out. The will sits at the centre, and drafting it is a lawyer’s work. Yet a carefully drafted will can still leave an executor selling the cottage to pay a tax bill, or leave one child quietly carrying a cost the parents meant to share.
Sheldrake works on the parts of a plan that depend on money arriving in the right place at the right time: tax at death, probate, beneficiary designations, insurance, and the executor’s first year. That work is done with the lawyer and accountant already advising the family, as part of the plan they are building.
- For many estates, income tax on the final return is a larger cost than probate. RRSP and RRIF balances and accrued capital gains are generally taxed at death unless they pass to a spouse.
- Assets with a named beneficiary or a surviving joint owner can pass outside the will, and usually outside Ontario’s Estate Administration Tax. Reducing probate does not necessarily reduce income tax, and these arrangements can produce a different division than the will intended.
- Tax is due whether or not anything has been sold. An estate can be valuable on paper and still short of the cash to settle its bills.
- An executor inherits the work before anyone inherits the money. A plan that makes that year manageable is part of the estate plan, not an afterthought.
What every estate has to settle
What will the estate owe? Death can trigger income tax on the final return, particularly on registered plans and on property that has grown in value, and Ontario charges Estate Administration Tax on the assets that go through probate. For many families the income tax is the larger of the two, and few have estimated either.
Where will the cash come from? Those bills fall due on a timetable set by the CRA and the court, not by the real estate market. An estate made up of a house, a cottage and a business can be worth millions and still have little the executor can spend in the first months. Assets that pass directly to a beneficiary or joint owner are usually beyond the executor’s reach, while the bills remain the estate’s. The value was there. The access wasn’t.
Who receives what? And does the result match what was intended? A will, a set of beneficiary designations and a joint bank account are often arranged years apart, by different people, for different reasons. Each can be sensible on its own. Together they can produce a division nobody chose.
Five areas of planning
How Sheldrake works on an estate
Working alongside your other advisors
Good estate planning usually involves several professionals, and Sheldrake’s work is designed to fit with theirs. Wills, powers of attorney and trusts are drafted by the client’s lawyer. Tax positions and filings belong with the accountant. Sheldrake brings the insurance and liquidity decisions into the same plan and keeps them consistent with what the others are doing.
Sheldrake Group is a licensed life insurance agency. It does not give legal, tax or accounting advice, and it does not provide securities or portfolio management services. Where investment management is part of a family’s plan, it is provided by an appropriately registered advisor or firm.
Zachary Sikorski holds the Certified Executor Advisor (CEA) designation, with a particular interest in the administrative and financial work an executor faces in the first year.
Common questions
Does Canada have an estate tax?
Not by that name. Canada taxes the deceased’s final income tax return, including deemed capital gains and most registered plan balances. Ontario separately charges Estate Administration Tax when an estate certificate is issued.
What is the difference between probate and tax at death?
Probate is the court process that confirms an executor’s authority, and Ontario charges $15 for every $1,000 of estate value above $50,000 when a certificate is issued. Tax at death is income tax on the final return, assessed by the CRA. For many estates it is the larger of the two.
Do I need a lawyer to plan my estate?
For the will and powers of attorney, yes. Insurance, designations and liquidity decisions should be made in step with that legal work, not separately from it.
How often should an estate plan be reviewed?
After any significant change in family, health, property or business, and otherwise every few years. Beneficiary designations deserve a look more often than the will, because they are easy to forget and they override it for the assets they cover.
This material is provided for general educational purposes and is not individualized legal, tax, accounting, investment or insurance advice. The examples and strategies discussed may not be appropriate in every circumstance. Tax and legal outcomes depend on individual facts, ownership, policy terms and legislation in effect at the relevant time, and may change. Insurance recommendations should be based on an individual needs analysis and consideration of available alternatives, product terms, costs, guarantees and risks. Where tax, accounting or legal matters are involved, Sheldrake Group works alongside the client’s qualified professional advisers.
Sheldrake Group Inc. O/A Sheldrake Group is a licensed life insurance agency in Ontario. Information on this page is general in nature and is not tax, legal or insurance advice.