Table of Contents
- Estate Planning for Seniors: A to Do List
- Purchase Life Insurance
- Keep Your Will Up to Date
- Undertake an Estate Freeze
- Reduce Taxes on Your Overseas Assets
- Medical Power of Attorney
- Health Care Directives
- Inter Vivos Trust
- CPP Plans
- Designate a Beneficiary of Specific Plans
- Own Assets Jointly
- Have Two Wills
- Designate Your Home as your Principal Residence
- Bottomline
According to research undertaken by estate planning experts and financial institutions in Canada, there is a shocking finding that between 50 and 70 percent of Canadians lack a valid will or full estate plan. This is not only a lost opportunity, but a dangerous oversight. Lacking a proper estate plan, your desires regarding the way your property must be divided are not written anywhere. Instead, the responsibility of dividing your estate falls to the courts, which will act strictly in accordance with provincial succession laws. That can lead to delays, unnecessary legal costs, and outcomes that may not reflect your true intentions.
On the other hand, putting together a thoughtful estate plan empowers you to stay in control–ensuring your assets are managed smoothly, your loved ones are financially supported, and your estate is structured to minimize tax burdens. It’s not just about legal documents. It’s about leaving clarity instead of confusion, and comfort instead of chaos.
Estate planning becomes even more critical in old age because it is more than just managing your assets after your death, medical power of attorney and other legal documents.
Not to mention that in old age, the risk of medical illness or incapacity increases manifold. Moreover, issuing specific directives related to modes of treatment and nursing is also necessary.
Estate Planning for Seniors: A To-Do List
The following are the issues to consider when it comes to Estate Planning in old age:
- 1. Purchase Life Insurance
When you are getting older, you tend to be more attached to the things you possess. Hence, your estate should stay within your family. It is notable that in Canada, the death taxes are wide-ranging. Your heirs may have to sell some of the assets to settle the liabilities.
Life insurance is a great way to settle these dues in this scenario. It will provide much-needed cash to the heirs and help the estate remain within the family.
- 2. Keep Your Will Up to Date
Having an up-to-date will is as important as making the will itself. Because as your life evolves, so should your estate documents. An outdated will can cause legal complexities and confuse the estate distribution process.
For example, if one of your children gets divorced, you will naturally want to reassess their share in the inheritance because of their ex-spouse’s share. Similarly, if you have a company, it may procure some new assets, which need to find their way into the will document. Either way, it is essential to have an updated will so that asset management goes smoothly.
- 3. Undertake an Estate Freeze
An estate freeze is a strategic tool for deferring tax on death and preserving family wealth across generations. Rather than distributing a company’s individual assets–which, in the case of an incorporated business, you do not personally own–you’re planning the future of your ownership interest: the shares. Freezing the value of those shares at the current fair market value settles your tax liability in the present and passes growth in the future to the next generation. Not only does this method stabilize the tax liability of your estate, but it will also enable your heirs to enjoy any increase in value of the company without any immediate tax liability.
Used thoughtfully, an estate freeze can offer your family some financial breathing room during a difficult time. While the freeze itself does not erase capital gains, it does fix them at a predictable level, deferring further tax and shifting future growth to those you care about most. Combined with proper estate documentation, this technique transforms uncertainty into clarity and confusion into control.
- 4. Reduce Taxes on Your Overseas Assets
Make time to consider the assets you have in overseas territories. They can lead to double probate or double taxation.
Notably, Canada has bilateral treaties with some countries to prevent double taxation. Hence, you should consult an attorney to bring all assets under one probate and one taxation regime.
- 5. Medical Power of Attorney
Depending on where you live, this document may be called a Personal Directive, Health Care Directive, Representation Agreement, or Power of Attorney for Personal Care.
Whatever the name, the purpose remains vitally important: to ensure that someone you deeply trust is empowered to make healthcare decisions that align with your values, wishes, and beliefs. In times of crisis, when you can no longer speak for yourself, this person becomes your voice, navigating complex choices and protecting your dignity. Planning ahead means giving your loved ones guidance, not guesswork, and ensuring your care reflects who you truly are.
- 6. Health Care Directives
Health Care Directives are those documents you sign stating your wishes about how you want to get medical treatment. Some of the issues to consider in this regard are the following:
- Whether you would like to be kept alive on artificial life-prolonging instruments.
- How and by whom would you like to be nursed?
- Are there any other medical priorities you want to set?
- 7. Inter Vivos Trust
An inter vivos trust, Latin for “between living persons”, lets you transfer and manage assets during your lifetime. Many use it to see how their estate plan plays out in real time, offering control and continuity.
But despite its appeal, this type of trust doesn’t come with automatic tax benefits. Without careful planning, income may be taxed in your hands due to attribution rules, or within the trust at the highest marginal rate. There’s no spousal rollover, and no tax break at death–the assets are treated as sold at fair market value, just like personal holdings.
Additionally, successor trusts created after your death won’t qualify for GRE or QDT status, exposing them to steep taxes. Charitable donations must be timed carefully to claim credits.
Inter vivos trusts can work well, but only with expert guidance. Without it, the tax cost may outweigh the control.
- 8. CPP Plans
CPP stands for Canada Pension Plan. It is unique in that your spouse can also benefit from it. Here are the two benefits you can leave to your spouse:
- CPP Survivor Benefit This monthly benefit provides lifelong support to a surviving spouse. While it can be received alongside the survivor's own pension, a maximum limit applies to the combined amount. It's important to note that this benefit counts as taxable income and must be reported on the survivor's personal tax return.
- CPP Death Benefit This is another benefit available to the surviving spouse, paid out as a one-time lump sum. It is not tax-free. The amount must be reported as income either on the T3 Trust Return or on the personal tax return, depending on who receives it.
- 9. Designate a Beneficiary of Specific Plans
There are specific plans, such as life insurance, RRSP, RRIF, and others, for which you can deposit your money tax-free.
The unique aspect of such accounts is that they will go to the beneficiary without probate.
Some of those plans are the following:
- RRSP: Registered Retirement Savings Plan (RRSP) is an account which is registered by the government and is used to save retirement funds of Canadians. Almost 62 percent of Canadian residents between the age range of 35 and 54 years respond that they intend to donate. Donations are tax-deductible, and although the investment returns are not tax-exempt, they accumulate tax-free until they are withdrawn.
- Likewise, no immediate tax will be incurred on taking a Registered Retirement Income Fund (RRIF) to a spouse or eligible dependent. In the case when there is no rollover available, the total amount becomes subject to taxation on the final return of the deceased.
- RRIF: Registered Retirement Income Fund is like RRSP and is subject to spousal rollover.
- TFSA: A Tax-Free Savings Account (TFSA) is a smart way to grow your money without paying tax on the investment returns. While contributions don't reduce your taxable income, all earnings and withdrawals remain completely tax-free. You can name a successor holder, usually your spouse, who can take over the account without tax consequences. If you name a beneficiary instead, they receive the account value tax-free, but any income earned after your death becomes taxable to them.
The money goes to the designated beneficiary at your death without a probate.
- 10. Own Assets Jointly
Joint tenancy means two or more people share equal ownership of an asset. When one owner passes away, the asset automatically passes to the survivor, bypassing probate. However, while it may save time and legal fees, it doesn’t avoid taxes. Capital gains may still apply on the deceased’s portion, depending on who the co-owner is.
- 11. Have Two Wills
The benefit of having two wills is that in one of the two wills, you will testify about assets which are not subject to probate. If you create only one will, all the assets will see probate and delay the rollover, even for those that do not need probate.
- 12. Designate Your Home as your Principal Residence
Remember to take advantage of the tax exemption available for principal residences. Make sure you declare that property as your principal residence, as this will likely incur the most taxes.
Bottomline
Estate planning is essential in any part of your life, but it is inevitable in the later years of your life. In this regard, it is beneficial to spend some money to hire an expert so that your estate goes to your loved ones in the manner you desire, and you can take care of them in your absence.