We are often asked questions relating to the costs of an estate plan – rightfully so. You are being bombarded by ads on social media that offer you the opportunity to do a Will for what seems to be a reasonable amount. What is not being factored in is the value-add that we, as lawyers, bring to the equation.
We have to start with the basic premise that a Will is not just a simple document – it is effectively the instructions of how to deal with all of your assets. It’s not as easy as just “writing a will” – there is much more involved. One of the key concerns is how to deal with the issue of tax!
I like to explain it to clients with this simple sentence – at the back of the church at your funeral there is one very happy party – the government! We have all heard the old joke that you can’t avoid death and taxes – maybe this should be rephrased to “you can’t avoid taxes on your death!” What does this exactly mean?
The fact is that on your death, the government imposes what is called a “deemed disposition” – effectively they treat all of your assets as having been sold. This results in the realization of all of the taxes on your assets: capital gains are crystallized, income is recognized and certain assets like RRSP’s get what is effectively an axe taken to them. That’s right – the tax man comes knocking and it’s loud, it’s aggressive and it is shockingly more serious than most of us can imagine. For example, without proper planning 45% of your RRSP is lost in Alberta to taxation (the number is far worse in other provinces). That means that $45,000 of every $100,000 in your RRSP may very well disappear unless certain actions are taken.
On top of this, any property you have other than your principal residence may also be subject to potential capital gains tax. There goes another 25% of that value. If you have a lot of your assets in a company you have worked all of your life to develop, your heirs can potentially say goodbye to 62% of that asset. The list is daunting and without proper advice your heirs can and will suffer the consequences of this situation.
This is where lawyers can and do step into the void. Understanding the options available to you is serious business and should garner the attention it deserves. Ultimately, doing a proper estate plan is something you should only have to do a few times in your life unless there are major changes in your situation. Life does happen but having a lawyer who not only is sympathetic to the changes but who can also tailor your estate plan to you is absolutely critical. There are options and ways to minimize the impact of taxes on your loved ones – it’s truly something that deserves attention and certainly is something that warrants the small additional cost to have it done right.
Starting the process is far simpler than you can imagine, contact us or give us a call to understand how we can help you along this journey.
