Estate Planning in Ontario: A Comprehensive Guide for Individuals and Families

___________________________________________________________________________________________________________

M. Hanif Shaikh

September 30, 2025

Estate planning is a crucial step in protecting your loved ones, preserving your assets, and ensuring your wishes are carried out. In Ontario, an effective estate plan involves more than just drafting a Will. It addresses probate, taxes, and planning for incapacity — providing clarity and peace of mind.

At MHS Tax, we guide clients through every stage of the estate planning process with professionalism and care.

Why Estate Planning Matters in Ontario

Without a proper estate plan:

• Ontario’s Succession Law Reform Act determines how your assets are distributed, which may not reflect your intentions.
• Your estate may face unnecessary probate fees and tax liabilities.
• Family members may encounter delays, additional costs, and disputes.
• In the event of incapacity, there may be no legally authorized decision-maker for your finances or healthcare.

A comprehensive estate plan ensures your affairs are handled as you intend and minimizes stress for your loved ones.

Core Components of an Ontario Estate Plan

1. A Legally Valid Will

A properly drafted Will allows you to:

• Choose how your assets will be distributed.
• Appoint an Estate Trustee (Executor) to manage your estate.
• Name guardians for minor children.
• Include provisions for dependants and charitable gifts.

Having a lawyer prepare your Will helps prevent disputes and ensures compliance with Ontario law.

2. Powers of Attorney

Estate planning also addresses situations where you are unable to make decisions yourself.

• Continuing Power of Attorney for Property – appoints someone you trust to manage your finances and property.
• Power of Attorney for Personal Care – designates someone to make healthcare and personal decisions on your behalf.

These documents ensure your wishes are respected during periods of incapacity.

3. Trusts

Trusts are valuable tools for tax planning, protecting assets, and managing how beneficiaries receive inheritances.

Common trusts include:

• Spousal Trusts – defer capital gains tax until the surviving spouse’s death.
• Testamentary Trusts – created in your Will to manage assets for minors or vulnerable beneficiaries.
• Henson Trusts – protect eligibility for government benefits for beneficiaries with disabilities.
• Family Trusts – often used for business succession, income-splitting, and long-term asset protection.

Trusts should be established with both legal and tax advice to meet your unique objectives.

Tax and Probate Considerations in Ontario

1. Capital Gains at Death

Canada does not have an inheritance tax.
However, at death, most assets are deemed to be sold at fair market value:

• 50% of any capital gain is taxable on the deceased’s final tax return.
• Transfers to a surviving spouse or qualifying spousal trust typically defer the tax until the spouse’s death.

2. Estate Administration Tax (Probate Fees)

Ontario’s probate fee is calculated as follows:

• $0 on the first $50,000 of the estate’s value.
• $15 per $1,000 (1.5%) on the value above $50,000.

Assets that pass directly to beneficiaries (e.g., RRSPs, TFSAs, life insurance policies) or through joint ownership with right of survivorship generally avoid probate.

Strategies to Minimize Probate Fees and Taxes

• Designate beneficiaries on registered accounts and life insurance policies.
• Consider joint ownership with right of survivorship (after obtaining legal advice).
• Establish trusts for tax efficiency and to control the timing of distributions.
• Make charitable gifts during your lifetime or through your Will to receive donation tax credits.
• Keep detailed records of asset purchase prices and improvements to ensure accurate capital gains reporting.

Steps to Create an Effective Estate Plan

1. Inventory Your Assets and Liabilities
   Include real estate, investments, business interests, pensions, and personal property.
2. Clarify Your Goals and Beneficiaries
   Consider family members, dependants with special needs, and charitable organizations.
3. Consult Professional Advisors
   Work with an estate lawyer, tax advisor, and financial planner to develop a coordinated plan.
4. Prepare Essential Documents
   Draft your Will, Powers of Attorney, and trust agreements if appropriate.
5. Review and Update Regularly
   Update your plan after major life events such as marriage, divorce, the birth of a child, or the acquisition of significant assets.
6. Communicate Your Plan
   Ensure your executor and key family members know the location of your documents and understand your wishes.

How We Can Help

At MHS Tax, we offer comprehensive estate planning services tailored to your unique needs. We:

• Help you understand your options and clarify your goals.
• Identify potential tax and probate issues.
• Draft legally compliant documents to protect your interests.
• Work in collaboration with financial and tax advisors for a seamless strategy.

Contact today to schedule a consultation and begin planning with confidence.