Five Reasons Why You Need an Estate Plan in Ontario

Why Do You Need an Estate Plan?

There are many reasons why everyone needs an estate plan, regardless of age or wealth. Here are five of the most important reasons:

1. To ensure that your assets are distributed according to your wishes. Without an estate plan, your assets will be distributed according to the laws of intestate succession. These laws may not reflect your wishes, and they could lead to conflict among your heirs.
2. To protect your minor children. If you have minor children, your estate plan should name a guardian for them. This will ensure that they are cared for by someone you trust if you and their other parent die while they are still minors.
3. To avoid probate. Probate is the legal process of having your executor appointed by the court so they can officially deal with the assets of the estate. It can be a time-consuming and expensive process. By getting expert advice on how your assets are held, you may be able to avoid the probate process.
4. To minimize estate taxes. Many people are surprised to hear how much tax their estate will owe upon their death.  Estate planning can help you to plan for the future to minimize estate taxes and pass more of your assets to your loved ones.
5. To make your wishes known. Even if you have a small estate, it is important to have an estate plan in place so that your loved ones know your wishes. This can help to avoid conflict and uncertainty after your death.

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Ontario Estate Planning Laws

In Ontario, the laws of intestate succession govern how estates are distributed if a person dies without a will. The laws of intestate succession give priority to the deceased person's spouse and children. If the deceased person has no spouse or children, their assets will be distributed to their parents, siblings, nieces and nephews, and other relatives in a specific order.

If you have minor children, it is important to name a guardian for them in your will. If you do not name a guardian, the court will appoint a guardian for your children. The court will consider a number of factors when appointing a guardian, including the child's best interests and the wishes of the deceased parent.

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Creating an Estate Plan

The first step in creating an estate plan is to make a will. A will is a legal document that states how you want your assets to be distributed after your death. You can also use your will to name a guardian for your minor children and to appoint an executor to administer your estate.

In addition to a will, you may also want to create a trust. A trust is a legal arrangement in which you transfer ownership of your assets to a trustee. The trustee holds the assets in trust for the benefit of the beneficiaries you have named. Trusts can be used for a variety of purposes, such as providing for minor children, protecting assets from creditors and in-laws, and reducing estate taxes.

You will also need to consider create two powers of attorney. One for property and one for your personal care. A power of attorney is a legal document that gives someone the authority to make financial/legal and health care decisions on your behalf if you become incapacitated. A living will states your wishes for end-of-life care and can be added as an addendum to your Power of Attorney for Personal Care.

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Steps and Checklist for Planning an Estate

Planning an estate in Ontario involves several steps to ensure your assets are handled according to your wishes after you pass away.

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Here's a detailed checklist to guide you through the process:

1. Document Your Assets: List all your assets, including property, investments, bank accounts, and personal items of value.
2. Identify Your Beneficiaries: Decide who you want to inherit your assets. These can be family members, friends, or charities.
3. Draft a Will: Create a will that clearly states your wishes to distribute your assets.
4. Choose an Executor: Select a trustworthy person to carry out the terms of your will.
5. Plan for Minors: If you have children under 18, appoint a guardian in your will.
6. Consider a Trust: If you want more control over the distribution of your assets, consider setting up a trust.
7. Make Advance Directives: Prepare documents like a power of attorney and a living will to handle your affairs if you become incapacitated.
8. Review Insurance Policies: Ensure you have adequate life insurance to cover debts and taxes and provide for dependents.
9. Keep Documents Accessible: Store your estate planning documents in a safe but accessible place and let your executor know where they are.
10. Review and Update Regularly: Revisit your estate plan regularly or when major life events occur to ensure it still reflects your wishes.

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How to Choose Your Executor and Power of Attorney 

Choosing an executor and power of attorney is a pivotal decision in estate planning. For the executor, select someone you trust implicitly, who is organized and has the time and ability to manage complex tasks. They will handle your estate after you pass, so reliability and integrity are essential.

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When appointing a power of attorney, you need someone who understands your wishes and values, as they will decide on your behalf if you cannot. It's often wise to select someone financially savvy, especially for a financial power of attorney, and someone who aligns with your medical preferences for a healthcare power of attorney.

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In both cases, it's crucial to have open discussions with those you choose to ensure they're willing and able to take on these responsibilities. It's also essential to have a backup in case your first choice cannot perform the duties when the time comes.

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How to Choose an Estate Planning Lawyer

It is important to choose an estate planning lawyer who is experienced and knowledgeable about Ontario estate planning laws. You should also feel comfortable discussing your personal and financial situation. Call us today to discuss your particular situation.