Have you been appointed as an estate trustee in Ontario? Are you unfamiliar with or overwhelmed by your administrative obligations? If so, you are not alone.
When a person dies, his or her debts must be paid before any estate assets are passed on to a spouse or heirs. Common debts that must be settled are funeral expenses, taxes on Registered Retirement Savings Plans, taxes on capital gains and the estate administration tax, which in Ontario is nearly 1.5 per cent of the estate's value.
If someone dies without a will in Canada, his or her estate will be divided by the provincial government through a process known as probate. What this can mean is that a person's assets will not go to the beneficiary the individual may have desired, but will be distributed according to a formula. The best way to avoid this and ensure that the intended beneficiaries receive the assets is through estate planning and the drafting of a will.
When a person dies in Ontario, someone has to administer their estate. Administrators were previously appointed during probate. However, a person now gains the authority to administer an estate by obtaining a certificate from the Superior Court of Justice. As part of that process, an estate administration tax must be paid when an application for a certificate is submitted.
Financial advisers say it is important for Ontario couples to discuss their finances and be prepared for the death of a spouse. Otherwise, the loss of a spouse can put an enormous financial strain on the survivor. Reports indicate that many Canadians do not have wills. Excuses often heard include not being able to decide on an executor or a specific guardian because a person is afraid they will change their mind.
While experts recommend that everyone undertake thorough estate planning, it is especially important for Ontario residents with children, substantial assets or a business. Proper estate planning ensures not only that someone's wishes will be carried out upon their death, but it also makes life easier for the executor and their heirs.
There are a number of reasons that Ontario residents might put off discussing estate planning with their heirs. In addition to the discomfort that some people feel when talking about their own mortality, many are also concerned about raising issues related to estate planning, like inheritances, dividing a family business and distributing heirlooms. Some parents have the concern that if they tell their children they stand to inherit substantial assets, they may not put as much effort into establishing a career.
Ontario couples who delay planning for their death may be running many risks. Estate planning can help outline how a person wishes his or her funeral and burial to be conducted. It can also help individuals to provide details about the distribution of their assets so that the courts do not dictate these details.