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July 2013

Don’t make these common estate planning mistakes!

by Rona Birenbaum  |  2 Comments


Getting Married


How can getting married be an estate planning mistake?  Well, in most Canadian Provinces, marriage automatically revokes a will made prior to the marriage unless the will clearly states that it was created in contemplation of marriage (to the person you ultimately marry!).   So unless you have a new will drafted and signed following marriage, at your death you would be considered intestate (having died without a valid will).  The estate laws of the province would then dictate the distribution of your assets.  The unintended consequences could include:

  • Bequests to friends or charities outlined in the pre-marriage document would be ineffective.
  • Delays can result. For example, in Ontario, Pursuant to s. 26 of the Estates Administration Act, subject to s. 53 of the Trustee Act, no distribution is to take place from an intestacy for one year.
  • Trusts for children that are commonly included in wills to delay the distribution of estate proceeds beyond the age of majority (18) would be ineffective.
  • Even if you would be satisfied with how the provincial government dictates the distribution of your assets, the estate would bear an additional administrative burden resulting in additional legal and court fees.


Getting separated


Unlike marriage, separation (without any formal separation agreement or divorce) will not automatically revoke a will that likely has all or a significant portion of the estate benefitting the soon to be ex-spouse.  We recommend getting legal estate planning advice immediately following a marriage breakdown.


Having an outdated will


Wills are drafted in line with your financial and relationship status at a moment in time.  Flash forward a decade or two and what was a sensible will can result in unintended consequences.  There are enumerable changes that would justify an update or redrafting of a will, but here are a few examples.

  • A large charitable bequest is named in dollar terms with the estate residue directed to family.  At the time of drafting, if the person’s estate is worth $2 million and the bequest is for $500,000 that might be reasonable.  Over time, if the value of the estate declines as the person uses their capital in retirement, they may pass away with an estate valued at less than the bequest.  In this case, the family members would receive no benefit.  Estate litigation could result.  Charities are known to get involved in Estate Litigation to secure bequests, so don’t assume that they are pushovers.
  • Children often experience different degrees of financial success/hardship over time.  A will that distributes an estate equally, may not be desirable in this scenario.
  • The optimal choice for a guardian for minor children may also evolve over time and should be reflected in an updated will.
  • The suitability of named executors can also change over time.


Ignoring tax implications


Although there is no estate tax in Canada, significant taxation can occur at death.  These taxes result from the “deemed disposition” rule wherein CRA considers all of your assets “sold” on the day prior to your death.  Unless you designate your spouse as beneficiary of any registered plans and other appreciated assets, taxation will result.  If taxation is not considered, unintended consequences can result.  We will deal with this in a future post.




Taking the time and spending the money to have a well developed estate plan is a gift that you give your survivors.  Leaving an untidy estate for your mourning loved ones to deal with is easily avoidable.  It is one of those tasks that falls to the bottom of the to do list, but when complete results in a sense of accomplishment and peace of mind.


This information is not to be construed as legal advice. If legal assistance is required, the service of a competent professional should be sought.



  May 30, 2014 13:54PM
I know it's important to designate a spouse as the beneficiary of your registered plans, but if that spouse dies and you are able to designate other individual beneficiaries, would you .. so that payout on your death does not result in taxation and possible probate fees for the beneficiaries? Specifically, if there are 2 or more children you can name as beneficiaries, would you designate them as the beneficiaries of all registered plans and other appreciated assets, or would it be more prude...

  Jun 06, 2014 12:29PM
Rona Birenbaum
Thank you for your question, Josie. The only cost that is avoided by naming a non-spouse beneficiary of a registered plan is the probate fee that is 1.5% at this time. Tax is still payable on the full value of an RRSP or RRIF. However, it is the estate that is on the hook for the tax, while the beneficiary got the entire account value. That can create some unintended consequences in my opinion. Depending on the situation, naming the estate the beneficiary when no spouse exists might cost the...



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