All About Estates

No plan is usually not the best plan

When faced with making decisions, doing nothing is an option and for some decisions that could be the most viable option. However, In the world of estate planning, doing nothing rarely turns out to be a good idea.

We can all point to an example of executing a deceased’s estate gone wrong.  Most times a disastrous estate situation could have been avoided or mitigated if the deceased would have done a little planning during their lifetime. Surprisingly, many estates go off the rails due to overlooking the most basic of estate planning and not having an updated properly executed will and current direct designations. This lack of basic planning is not isolated to the unsophisticated.  In fact, many professionals who deal with estate planning for their clients often overlook their own planning until it’s too late. Another situation that can cause hardship to families, who are already grieving the death of their loved one, is the direct designation of certain financial assets or life insurance polices outside of the will. It is too easy to forget about the life insurance policy or RRSP account you set-up 10 years ago that designated a previous partner as the beneficiary and only upon the death of the policy holder was this discovered.

I got to see this exact scenario play out in front of me. An individual was living common-law with his partner and their young child when he suddenly passed away. He forgot that a partner from a previous relationship was the direct designation on his life insurance policy thus his young child and current partner were not provided for upon his death and faced financial hardship.  Just recently, CBC published an article[1] about a Halifax woman dealing with a similar situation. In her situation, her late husband’s RRSP was directly designated to his mother and thus the wife did not receive the proceeds. In this situation his estate had to pay the tax without receiving the funds from the RRSP placing a further financial hardship on the estate and the wife.

These types of situations can easily be avoided if individuals would have an updated properly executed will and updated direct designations on their financial assets and life insurance policies.

Now estates come in all shapes, sizes and complexities with some estates requiring more sophisticated tax planning. I found the best planning tool to assist clients with larger more complicated estates was to visually map out the will so the client could see how their estate would be divided among their beneficiaries. Through this exercise we would review each beneficiary’s bequeathed asset and the potential tax consequences along with future management issues that might come with that particular asset. Here are a few of potential issues that should be addressed throughout the estate planning process:

  • Succession of private company assets, both at the management and shareholder level;
  • Qualification of the company for the capital gains exemption[2];
  • Consideration of potential issues over assets bequeathed to multiple beneficiaries (i.e. cottage);
  • Direct designation of assets such as RRSP, TFSA, life insurance, etc.
  • Tax efficiency of bequeathed assets (i.e. spousal rollover, other tax-free roll overs, principal residence exemption, etc);
  • Control of assets (would a trust be beneficial to use); and
  • Post-mortem tax planning.

This blog is only scratching the surface regarding estate planning and we could write an entire book dealing with the potential issues listed as well as the many other issues not mentioned.

I assume that most professionals reading this blog already subscribe to the notion of encouraging their clients that planning is the best defence against loved ones dealing with a disastrous estate situation. My hope is that this blog will work its way into the hands of those individuals that always consider estate planning as something they will do when they get around to it. Death is sometimes sudden, robbing families of their opportunity to develop a plan to avoid financial hardship. With estate planning, no plan is usually a bad plan.


[2] Normally a qualifying corporation would have to be a small business corporation at the time of disposition, even a deemed disposition.  There is an exception upon the death of a shareholder providing a 12 month window ending immediately prior to death where the company may qualify as a small business corporation.)

About John Oakey
National Tax Director for Baker Tilly Canada. John has extensive experience with Canadian corporate and personal income taxes with specialization in the areas of corporate reorganizations, estate planning, succession planning and tax compliance. He also has significant experience dealing with GST/HST issues and U.S. citizen cross-border tax reporting issues.


  1. Heike Mertins

    May 27, 2021 - 6:12 pm

    There always seems to be two camps around this issue. Those who have their estate planning in order and those who continue to avoid doing so. I’ve long wondered why this is. I am always amused that the act of creating wills and estate plans for some, brings them too close to the idea that they are mortal. Any insight into how to encourage these individuals to act despite their fears would be helpful.

    • John Oakey

      May 31, 2021 - 12:24 pm

      In my experience the biggest deterrent for estate planning is lack of priority. We prioritize what needs to be done immediately, and estate planning usually falls to the back of the priority list until one day it becomes the priority. The problem is we can’t predict our death, so delaying its prioritization is a lot like gambling. Sometimes you win and sometimes you lose. The best way to encourage an individual to act is to not give them a choice and to make the process simple. I have two buckets of clients. Bucket “one” is for clients that prioritize estate planning and we invest sufficient time and energy to properly plan. Bucket “two” is for clients that don’t prioritize estate planning and I make sure we discuss the basics at a minimum: life, health and critical illness insurance; proper direct designations; and a will. Bucket two clients still have gaps in their estate planning, but we have at least tackled the major aspects of a plan. When it comes to bucket two clients, I act as their quarterback and contact the appropriate advisors (lawyer, life insurance specialist, etc.) to get things moving because bucket two clients won’t prioritize. Once again, don’t give them a choice, you take control and we make the process and decisions as simple as possible.

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