Building a Well-Squared Estate: Key Themes for Modern Estate and Succession Planning
An organized estate is rarely the product of a single document or one-time meeting. It reflects a series of coordinated decisions about who will manage your affairs when you are unable to do it yourself, how your assets will pass after you are gone, how minors and other vulnerable people will be protected, and how tax and administrative frictions can be minimized. Examination of these themes illustrates that estate and succession planning is better understood as an integrated framework with several moving parts rather than as “just a Will.”
What follows is an overview of key themes and issues that have emerged in recent years as viewed through the lens of Ontario law, with some references to broader Canadian considerations.
1. Laying the Groundwork: Wills and Powers of Attorney
A well-structured estate plan starts with accurate information and clear objectives. Before any drafting begins, clients are encouraged to assemble core data: full legal names, dates and places of birth and marriage, citizenship, a detailed list of assets and liabilities (including digital assets and reward points), and copies of existing Wills, powers of attorney, trusts and relevant agreements (family law, shareholder, partnership, guarantees, and similar instruments).
This exercise serves two purposes. First, it forces a realistic inventory of what actually exists—assets, debts, legal obligations, and cross-border elements. Second, it frames the major goals and obligations of the plan: paying debts and taxes, providing for family and friends, structuring charitable giving, and enabling efficient management of assets and liabilities both during lifetime and after death, including the minimization (but not at all costs) of probate fees and income tax.
On the Will side, there are a series of recurring questions:
- Should there be one Will or multiple Wills (for example, to deal separately with probatable and non-probatable assets, or with assets in different jurisdictions)?
- Who will serve as estate trustee(s) and alternates, and on what compensation terms?
- How will guardianship of minor children be addressed, and what instructions should be left regarding pets and other animals?
- How will specific gifts (cash, personal effects, real property, digital assets, loyalty points) be structured, and how will the residue be divided (as well as whether the distributions should be outright or in trust)?
- What trust structures will govern ongoing assets management for spouses, minor children, vulnerable beneficiaries or longer-term family objectives?
Equally important are powers of attorney. For property, key issues include who will serve as attorney(s), whether they are appointed jointly or jointly and severally, how decisions are to be made (unanimous or majority), whether compensation is permitted, and whether the document can and should authorize tax planning, trust settlements or other more advanced steps. For personal care, decisions include the choice of attorney(s) and alternates, decision-making mechanics, and any specific wishes about treatment choices, religious or moral guidelines, organ donation, and restrictions on visitors.
In addition, it is important to underscore that documents should not be drafted in isolation. The Will(s), the powers of attorney, beneficiary designations, joint ownership arrangements and any trust deeds must be consistent and mutually reinforcing.
2. Beneficiary Designations and Joint Ownership: Powerful but Risky Shortcuts
Registered plans, pension plans and insurance policies often pass outside the Will through beneficiary designations. However, not every asset can carry a designation and the rules differ by product type. Life insurance (including segregated funds), many registered plans (RRSP, RRIF, TFSA, RDSP, RESP) and pension plans can generally accommodate some form of designation or successor arrangement, while ordinary non-registered investment and bank accounts cannot.
Within these categories, there are important distinctions:
- Successor annuitants/holders can be named on some registered plans such as RRIFs and TFSAs, permitting the surviving spouse or partner to step directly into the planholder’s shoes rather than receiving a lump-sum benefit and then transferring the eligible portion to their own plan.
- Successor subscribers can be appointed for RESPs through the plan documentation. Where it is done in the Will and the intended successor is the estate trustee, it is often subject to trust terms to prevent this successor from being able to benefit personally.
Life insurance deserves particular attention. The Insurance Act (Ontario) permits insureds to appoint a trustee to receive proceeds on behalf of a beneficiary, allowing proceeds to be paid to that trustee and managed on specific trust terms. This is especially useful where beneficiaries are minors or have disabilities, where creditor protection is sought, or where the insured wishes to separate control over the funds from the person who will ultimately benefit. The Act also contains robust creditor protection for properly structured beneficiary designations such as naming spouses or children. Insurance trustees are separate from the beneficiaries and there is no similar requirement in order to preserve creditor-protection.
By contrast, the legislative framework for RRSPs and RRIFs under the Succession Law Reform Act (Ontario) is less clear on the ability to pay proceeds directly to a trustee to create a separate trust that does not flow from the estate, and these plans do not attract the same express creditor-protection regime as insurance policies.
Dangers lurk when using beneficiary designations and joint ownership solely as probate-avoidance mechanisms:
- Simply adding an adult child as joint owner may create a trust arrangement, leaving beneficial ownership with the original owner during lifetime, and causing the asset to fall into their estate on death, despite legal title appearing to grant rights of survivorship to the child. These arrangements are now subject to new trust reporting and disclosure rules under the Income Tax Act. What is key is the intention of the adult when making the transfer, and there are other possible outcomes than a trust arrangement.
- Between spouses there is a presumption of advancement when there is a transfer of title for no consideration (i.e. a presumption that a gift was intended), whereas transfers from parent to adult child typically engage the presumption of resulting trust, placing the onus on the child to prove that a gift was intended.
- Joint ownership used as a probate-planning device can trigger immediate capital gains tax, jeopardize principal residence status for part of a property, expose the asset to creditor claims of the new co-owners and ultimately cost more in income tax than the estate administration tax saved.
The overall message is clear: designations and joint ownership are powerful tools but must be coordinated with the Will and trust planning, tax rules, creditor protection goals, and family dynamics all being carefully weighed. In addition, it cannot be assumed that the rules are the same in all jurisdictions. A change of province, or connection to other countries can alter the impact of planning. For example, Quebec civil law does not permit beneficiary designations and joint ownership with rights of survivorship. Therefore, moving from Ontario to Quebec can instantly change some aspects of a persons plans. US citizens and those with US situs assets may be exposed to U.S. estate tax. People with connections to foreign jurisdictions may be exposed to foreign gift and inheritance tax.
3. Planning for Vulnerable Persons: Disability, Capacity and Guardianship
“Vulnerability” is not a legal term of art in these materials; it is used in a broad sense to capture a range of circumstances: illness, accidents, problematic relationships, creditor pressure, addictions, or simple youth. Some vulnerable beneficiaries will qualify for formal disability programs, while others will not but still require protection.
For individuals entitled to support under the Ontario Disability Support Program Act and who qualify for the federal Disability Tax Credit, there is a suite of planning tools: Registered Disability Savings Plans, Henson trusts (fully discretionary trusts where the beneficiary has no enforceable right to income or capital), qualified disability trusts and preferred beneficiary elections. Used in combination and with careful attention to ODSP rules, these structures can preserve government benefits while markedly improving quality of life. Notably, current Ontario policy does not reduce ODSP benefits as a result of RDSP withdrawals.
Capacity is another central theme of estate planning. Ontario law treats capacity as task-specific rather than diagnosis-driven. Different tests apply to making a Will, managing property, granting a power of attorney for property, making personal care decisions or granting a power of attorney for personal care, and the degree of difficulty varies among them. The common-law test for testamentary capacity, derived from Banks v. Goodfellow, requires the testator to understand the nature and effect of the Will, the extent of their property, the claims of those who might expect to benefit, and to be free of undue influence. By contrast, the Substitute Decisions Act (Ontario) prescribes different tests for managing property and personal care, typically lower than the bar for a Will. Still different again are the respective tests for capacity to make a power of attorney for property or care.
Where capacity is lacking, the Public Guardian and Trustee may become statutory guardian of property in specific circumstances (for example, following a capacity assessment or under the Mental Health Act), with a procedure in place for replacement by family members or others. The PGT may also be called upon to act as guardian where there are no other viable options. Court-appointed guardianships of property and of the person require proof of incapacity, service on mandated respondents (including the PGT) and the filing of management or guardianship plans. Ongoing court and PGT oversight, including periodic passing of accounts, is common.
For minors, Ontario law does not automatically appoint parents as guardians of property. However, the law allows parents to receive up to a prescribed amount (currently $35,000) from an estate or trust for a child, but larger amounts must be paid into court or administered under a guardianship of property appointment for the minor. Once the child attains the age of majority, court control ends and the child will receive the balance remaining unless there is incapacity, in which case adult guardianship becomes necessary. Properly drafted trusts within Wills or inter vivos trust deeds are often preferred to court-based control for both minors and adults with diminished capacity as they can offer greater flexibility.
4. Trusts in the Modern Estate Plan
Trusts sit at the heart of much of estate and succession planning and the first point to note is that they are not separate legal persons akin to a corporation. Instead, they are distinct legal relationships with respect to property in which trustees hold legal title to the subject property for the benefit of others or for a charitable purpose. They are, however, separate taxpayers.
Three main categories of trusts are:
- Express trusts – intentionally created by a settlor, whether during lifetime (inter vivos) or on death (testamentary).
- Resulting trusts – arising by operation of law where property returns to the transferor or their estate (for example, parent-to-adult-child gratuitous transfers where a gift cannot be proved, or where an express trust fails to dispose of all its property). Another category is purchase money resulting trusts.
- Constructive trusts – arising by operation of law and imposed by courts to address unjust enrichment (remedial constructive trust), or recognized by courts to address unconscionable conduct (institutional constructive trust).
To create a valid express trust, the “three certainties” must be satisfied: certainty of intention to create a trust, certainty of subject matter (the property to be held in trust) and certainty of objects (the beneficiaries or, in limited cases, a permitted purpose). In addition, the trust property must be properly transferred to the trustee, which may involve updating share registers or complying with real property registration rules, depending on the asset. Trusts involving real property generally must be in writing.
Trusts are generally temporary structures in Ontario and many Canadian jurisdictions owing to the operation of a perpetuity period in those jurisdictions. As a result, trust deeds will specify a division date that is in advance of the perpetuity date, such as “21 years after the death of the last to die of the beneficiaries alive when the trust was created.” At that point, the trust ends for trust-law purposes, and the trustees become are then tasked with winding up the trust including paying debts and taxes and then distributing the remaining balance accordingly. The final tax year for the trust will be as normally determined under the Income Tax Act, but calculated to the division date. It is wise for trustees to seek CRA clearance certificates and beneficiary releases as part of the winding up process to manage their own risk.
Across all of this, the choice of trustee is critical. Trustees are fiduciaries, whether individuals or corporations, with significant powers and obligations that can expose them to liability. Not all trusts or trust beneficiaries are identical which means the selection of trustees must suit the circumstances to minimize conflict with beneficiaries and ensure the best results from the trust structure. Concise drafting and a careful choice of trustees can produce decades of orderly administration.
5. Multiple Wills and “Will Alternates”
Multiple Wills and trust-based “Will alternates” such as alter ego and joint partner trusts are increasingly used as probate-planning and administrative tools.
Multiple Wills. In Ontario, it is possible to separate probatable assets (which will require an estate certificate) from non-probatable assets (such as certain privately held shares, some loans and specific personal property) for estate administration purposes by using more than one Will. The primary motivations are to reduce estate administration tax and to simplify administration of assets that do not require a court grant to be dealt with. Additional reasons include managing assets in multiple jurisdictions, isolating unique assets destined for specific individuals, or assets for which the probate requirement may be uncertain (art, jewellery, intellectual property) so that the need for probate in one category does not “taint” the others and thereby drive up the amount of estate administration tax payable.
However, multiple Wills are not simply clones. They must be carefully choreographed to avoid inadvertent revocation, duplication or gaps. Key issues include:
- Selecting appropriate executors for each Will, bearing in mind jurisdictional rules and probate-planning goals. For example, in BC for the dual will strategy to work to reduce probate fees the executors of each Will must be different.
- Drafting gifts so that they work regardless of which Will has sufficient assets, often requiring repeated clauses with priority rules to avoid duplication of gifts.
- Clarifying definitions (for example, whether “children” includes step-children), and exactly which assets fall under each Will sometimes supplemented by basket clauses and explicit powers to accept or reject assets.
- Flexibility to allocate debts, taxes and expenses between the different asset pools across the multiple Wills.
Will alternates. Alter ego and joint partner trusts are described as “Will alternates,” though they do not displace the need for at least a basic Will. Instead, they allow older clients (age 65 or over as required by the Income Tax Act) to transfer assets on a tax-deferred basis into a trust in which they (and, in the joint partner version, their spouse or partner) are entitled to all of the income during their lifetimes and to the exclusive use of the property. On the last of their deaths, the trust property is deemed disposed of for tax purposes, and the trust deed specifies who ultimately benefits and on what terms. The standard 21-year deemed disposition rule is deferred until after the relevant deaths. Unlike with family trusts, principal residences can be held in alter ego and joint partner trusts without losing the associated tax relief afforded by the principal residence exemption.
These trusts serve several functions: reducing estate administration tax by moving assets outside the estate; providing a more robust and institution-friendly framework for asset management, particularly during incapacity, than a power of attorney alone; and making it more difficult to challenge the estate plan compared to a Will, given the different legal rules governing trust challenges compared to Will and estate challenges.
6. Business Succession: When the Enterprise Is the Estate
For many clients, their business is the single most important asset that will form part of their estate. As such, it is helpful to reframe business succession planning as an ongoing, systematic exercise aimed at keeping the business “succession-ready,” rather than a last-minute exercise triggered by an unexpected offer or illness, or the decision to retire. Left too late, tax planning opportunities may be lost and the time and cost burden of otherwise effective planning may increase. Disarray in a business can also lower its value to a potential purchaser.
Key operational elements include monitoring financing and guarantees, keeping contracts current, protecting intellectual property and data, maintaining accurate corporate records, ensuring that shareholder or partnership agreements are up to date and properly funded (for example, with life and disability insurance), and identifying tax-planning opportunities as the business evolves.
From an estate-planning perspective, several points stand out:
- Core documents. Business owners often need multiple Wills (to separate private company shares and other non-probatable assets from those requiring probate), carefully structured powers of attorney (sometimes separate ones for business interests versus personal property), inter vivos and testamentary trusts, family law agreements, and shareholder agreements with funded buy–sell arrangements.
- Double taxation on death. Corporate share ownership creates the potential for two layers of income tax on death: the deemed disposition of shares at death, and a second tax event when corporate assets are distributed from the company or shares are redeemed. Post-mortem planning techniques exist but generally work best if the corporate structure and funding have been aligned with them in advance.
- Rollover to a spouse or partner. Leaving shares to a surviving spouse or common-law partner, directly or in a compliant spousal trust, can defer the first layer of tax, but does not eliminate it; it simply transfers the latent tax burden to the survivor, who will face it on a later sale, redemption or reorganization undertaken to generate liquidity or comply with shareholder agreements.
- Separating votes and value. The use of different share classes, particularly “skinny” voting preferred shares with nominal value, can disentangle control from economic participation, simplify shareholder agreements and allow divergent family and non-family shareholders to manage their own estate and succession planning more flexibly. Voting trusts can be layered on where appropriate.
As with estates only holding personal assets, the selection of executors for an estate holding business interests requires special care. In some cases, a professional or “business executor” may be appointed under a particular Will or designated within a single Will with bespoke powers. More broadly, estates with business interests may benefit from the services of a corporate executor. They are neutral and can free up family and business colleagues to focus on other tasks as well as their own well-being.
7. Choosing and Supporting Your Decision-Makers
Across all topics—Wills, powers of attorney, trusts, business succession and disability planning—one theme recurs: strategy can succeed or fail on the strength of the decision-makers you appoint and the clarity of the framework you give them.
- Estate trustees must be capable of digesting legal, accounting and financial information, navigating family dynamics and working with professional advisers. Where complex assets such as operating businesses or specialized investments are involved, or there are assets located outside Canada, different trustees may be appointed under different Wills to reflect the relevant skills required and facilitate timely and effective administration.
- Attorneys for property and personal care should have the temperament and availability to manage day-to-day decisions, sometimes over many years, within the parameters prescribed by the Substitute Decisions Act and the grantor’s wishes.
- Trustees of inter vivos and testamentary trusts must understand their fiduciary obligations, including investment, reporting and tax-filing responsibilities, as well as the personal liability that may arise from missteps. Corporate trustees or professional co-trustees can contribute neutrality, continuity and expertise, at fees that reflect value for money often lower than those charged by family and friends.
- Guardians of property and of the person, whether for minors or adults, operate under court-approved plans and oversight, with formal accounting obligations and the potential need for court approval for amendments when circumstances change.
Providing these individuals with clear documents and open communication, as well as contextual letters of wishes where appropriate, as well as access to professional support is at least as important as the tax or probate efficiencies the plan may be designed to achieve.
Conclusion: Integration, Not Isolation
Estate and succession planning themes that have evolved over the years reinforce a simple but often overlooked proposition: effective estate planning is an integrated, iterative process. Wills and powers of attorney provide the basic legal infrastructure, but they must be coordinated with beneficiary designations, joint ownership arrangements, trusts, business structures, tax and probate planning, and disability and guardianship frameworks.
Short-term tactics such as adding a child to title or changing a beneficiary form can produce unintended and long-term consequences in tax, creditor exposure, benefit eligibility and family harmony. Conversely, thoughtful use of Wills (whether single or multiple), various forms of trusts, and properly structured business and incapacity planning can significantly reduce friction, cost and uncertainty for those left to administer your affairs when you are unable including the estate.
Ultimately, the well-squared estate is not defined by perfect prediction of the future that one hopes to be capture in a simple Will, but by deliberate alignment of documents, structures and people around clearly articulated goals and values. All of this to be regularly reviewed, and thoughtfully revised as circumstances change.
