Estate Planning in Ontario: What Every Family Needs to Know

Why Estate Planning Matters More Than You Think

Most people know they should have a will. Far fewer actually have one that is current, properly drafted, and part of a broader plan. In my experience working with families across London, Ontario, estate planning is the area most likely to be postponed indefinitely. People tell themselves they will get to it when they are older, when things are more settled, when they have more assets.

The reality is that estate planning is not just about distributing assets after death. It is about protecting your family while you are alive, ensuring someone you trust can make decisions if you become incapacitated, minimizing taxes and fees that erode what you leave behind, and keeping your family out of court.

Ontario has specific rules that govern how estates are handled, what happens when someone dies without a will, and how much the government takes in probate fees. Understanding these rules is the first step toward building a plan that actually works for your family.

Start With a Valid Will

A will is the foundation of any estate plan. In Ontario, your will directs how your assets are distributed, names an executor (called an estate trustee in Ontario), and can name a guardian for minor children. Without a will, Ontario's Succession Law Reform Act dictates who inherits your assets, and the result may not match your wishes.

If you die without a will in Ontario and you are married with children, your spouse receives the first $350,000 of your estate (the preferential share), and the remainder is split between your spouse and children. If your estate is worth $600,000, your spouse receives $350,000 plus one-third of the remaining $250,000 ($83,333), while your children share the other $166,667. For blended families, this default distribution can create real conflict.

Key Elements of a Strong Will

Estate trustee selection. Choose someone organized, financially literate, and willing to serve. Being an estate trustee is a significant responsibility that can take one to three years to complete. Name an alternate in case your first choice is unable or unwilling to act.

Guardian for minor children. If both parents die, the will should name a guardian. Without this, the court decides. Talk to your chosen guardian before naming them.

Specific bequests. If you want particular items or amounts to go to specific people or charities, spell it out. Vague language leads to disputes.

Residual estate. After specific bequests, debts, and taxes are paid, the residual estate is what remains. Your will should clearly state how this is divided.

Review frequency. Review your will every three to five years and after any major life event: marriage, divorce, birth of a child, death of a beneficiary, or a significant change in assets. In Ontario, marriage automatically revokes a prior will unless the will was made in contemplation of that marriage.

Powers of Attorney: The Documents People Forget

A will only takes effect after death. Powers of attorney are what protect you while you are alive. Ontario recognizes two types, and you need both.

Power of Attorney for Property

This document authorizes someone you trust (your attorney for property) to manage your finances and assets if you become unable to do so. This includes paying bills, managing investments, filing tax returns, and making decisions about real estate.

You can make this effective immediately (a continuing power of attorney) or only upon incapacity. Most people choose the continuing form with the understanding that the attorney will only act if needed.

Without a power of attorney for property, your family would need to apply to the court for a guardianship order, a process that costs thousands of dollars, takes months, and removes the decision from your hands entirely.

Power of Attorney for Personal Care

This document covers health care decisions, living arrangements, nutrition, hygiene, and other personal matters. Your attorney for personal care can only act when you are incapable of making these decisions yourself.

This is where you can include instructions about life-sustaining treatment, preferred living arrangements, and end-of-life care. While Ontario does not formally recognize a separate "living will," your power of attorney for personal care can include these wishes and they will guide your attorney's decisions.

Choosing the Right Attorney

Your attorney does not need to be a lawyer. It should be someone you trust deeply, someone who understands your values and will act in your best interest. Consider naming a different person for property and personal care if the skills required are different. A financially savvy sibling might be ideal for property decisions, while a spouse or child who understands your health preferences may be better for personal care.

Ontario Probate Fees: Understanding the Real Cost

Ontario's Estate Administration Tax, commonly called probate fees, is one of the highest in Canada. The rate is straightforward:

• $5 per $1,000 on the first $50,000 of estate assets
• $15 per $1,000 on estate assets above $50,000

In practical terms, this works out to 1.5 percent on assets above $50,000. Here is what that looks like for typical Ontario families:

• $500,000 estate: approximately $7,000 in probate fees
• $1,000,000 estate: approximately $14,500 in probate fees
• $2,000,000 estate: approximately $29,500 in probate fees

These fees are calculated on the total value of assets that flow through the will. The critical point is that not all assets flow through the will. Assets with named beneficiaries and jointly held property generally bypass probate, and this is where strategic planning makes a real difference.

Beneficiary Designations: The Simplest Probate Strategy

One of the most effective estate planning tools is also one of the simplest: naming beneficiaries directly on your financial accounts. In Ontario, the following accounts allow you to name a beneficiary or successor holder:

• RRSPs and RRIFs: Naming your spouse as beneficiary allows a tax-deferred rollover. Naming a financially dependent child or grandchild may also qualify for a rollover in certain cases. Naming anyone else triggers full inclusion of the account value as income on your final tax return.

• TFSAs: You can name a successor holder (spouse only) who inherits the TFSA and keeps its tax-free status, or a beneficiary who receives the funds but loses the ongoing tax shelter.

• Life insurance: Proceeds paid to a named beneficiary bypass the estate entirely. No probate fees, no creditor claims, no delays. This is one of the reasons life insurance plays such an important role in estate planning. For business owners, corporate-owned life insurance can also be a powerful estate planning tool, and the salary vs. dividends decision directly affects how much wealth stays inside the corporation at death.

• Segregated funds: Similar to life insurance, these investment products allow beneficiary designations that bypass probate.

I review beneficiary designations with every client as part of our estate planning process. It is remarkable how often designations are outdated, naming an ex-spouse, a deceased parent, or no one at all. A ten-minute review can save your family thousands in probate fees and months of delays.

Joint Ownership: Useful but Not Without Risk

Adding a child or spouse as a joint owner on a bank account or property is a common strategy to avoid probate. When one joint owner dies, the asset passes to the surviving owner automatically, outside the will.

For spouses, joint ownership of the family home is straightforward and appropriate in most cases. For other family members, it gets more complicated.

The Risks of Joint Ownership With Adult Children

Exposure to their creditors. If your child goes through a divorce, a lawsuit, or bankruptcy, your jointly held asset could be at risk.

Loss of control. A joint owner has legal rights to the asset. Your child could, in theory, sell their share or borrow against it without your consent.

Tax complications. Adding a child as joint owner of a property (other than your principal residence) may trigger a deemed disposition for capital gains tax purposes.

The Pecore presumption. In Ontario, when a parent transfers property into joint ownership with an adult child, there is a legal presumption that the child holds the asset in trust (a resulting trust) rather than as a true gift. This can lead to exactly the kind of legal dispute you were trying to avoid.

Joint ownership is a tool, not a universal solution. Use it deliberately and with professional advice.

Trusts: When They Make Sense

Trusts are not just for the wealthy. In Ontario, there are several situations where a trust can be a practical part of an estate plan.

Testamentary Trusts

Created through your will and taking effect on death, testamentary trusts can be useful when:

• You have minor children and want to control how and when they receive their inheritance
• A beneficiary has a disability and receiving an inheritance directly could affect their eligibility for Ontario Disability Support Program (ODSP) benefits (a Henson trust is specifically designed for this)
• You want to provide income to a surviving spouse while preserving capital for children from a prior relationship

Since 2016, most testamentary trusts are taxed at the highest marginal rate rather than graduated rates. The exception is a Graduated Rate Estate (GRE), which is available for the first 36 months after death and is taxed at graduated rates. A Qualified Disability Trust (QDT) also retains access to graduated rates.

Alter Ego and Joint Partner Trusts

Available to individuals aged 65 and older, these inter vivos (living) trusts allow you to transfer assets into the trust during your lifetime. Because the assets are held by the trust rather than by you personally, they do not flow through your will and are not subject to probate fees on death.

For someone with a $2,000,000 estate, an alter ego trust could save close to $29,500 in probate fees. The setup and ongoing administration costs need to be weighed against the savings, but for larger estates, the math often works.

Common Estate Planning Mistakes

After years of working with Ontario families, these are the mistakes I see most often:

No will at all. Roughly half of Canadian adults do not have a will. Ontario's intestacy rules may not reflect your wishes, and the court appointment of an estate trustee adds cost and delay.

Outdated beneficiary designations. Life changes, but beneficiary forms often do not. Divorce, remarriage, births, and deaths all warrant a review.

Ignoring the tax bill on death. When the second spouse dies, all remaining RRSPs and RRIFs are fully taxable as income. A $800,000 RRIF on a final tax return can result in a tax bill exceeding $400,000 in Ontario. Proactive tax planning during retirement, including strategic RRSP meltdowns, can significantly reduce this burden.

No powers of attorney. Without them, your family is forced into a costly and time-consuming court process to manage your affairs.

Assuming everything goes to your spouse automatically. Only jointly held assets and assets with named beneficiaries pass outside the will. Everything else is governed by your will, or by Ontario's intestacy rules if you do not have one.

DIY wills without professional review. Online will kits can be a starting point, but Ontario's rules around execution, witness requirements, and specific legal language mean that errors can invalidate the entire document. At minimum, have a lawyer review any will you prepare yourself.

Forgetting about digital assets. Online accounts, cryptocurrency, digital photos, and social media accounts all need to be addressed. Your estate trustee needs to know what exists and how to access it.

Building Your Estate Planning Checklist

A complete estate plan for an Ontario family should include:

1. A current, professionally drafted will
2. A continuing power of attorney for property
3. A power of attorney for personal care
4. Up-to-date beneficiary designations on all registered accounts and insurance policies
5. A review of asset ownership structures (joint ownership, trusts)
6. An inventory of all assets, debts, and digital accounts accessible to your estate trustee
7. Adequate life insurance to cover estate taxes, income replacement, and debt repayment
8. A tax-efficient plan for drawing down registered accounts during retirement
9. A letter of wishes providing guidance to your estate trustee on personal matters not covered in the will
10. A conversation with your family about your plans and where to find your documents

How Estate Planning Connects to Financial Planning

Estate planning does not exist in isolation. It is directly connected to your retirement income strategy, your tax plan, your insurance coverage, and your investment structure. The decisions you make about RRSP withdrawals in retirement affect the tax bill your estate will face. The way you structure your life insurance determines whether proceeds are available immediately or tied up in probate. Your investment account registrations determine whether assets pass efficiently or get caught in unnecessary legal processes.

This is why I approach estate planning as one component of a comprehensive financial plan, not as a standalone exercise. When I work with families in London, Ontario and surrounding communities, we look at all of these pieces together to make sure they are working in the same direction.

Take the Next Step

If you do not have an estate plan, or if the one you have has not been reviewed in several years, now is the time to address it. The documents themselves are not complicated, but the strategy behind them requires careful thought about your family's specific situation, your assets, and your goals.

As a financial advisor, I do not draft wills or powers of attorney. That is the role of an estate lawyer. What I do is help you build the financial strategy that makes your estate plan work: structuring beneficiary designations, coordinating account registrations, planning tax-efficient withdrawals that reduce the estate tax burden, and ensuring your insurance coverage aligns with your estate goals.

Book a free 15-minute call to talk through where your estate plan stands today. We will identify any gaps, discuss the strategies that apply to your situation, and make sure your family is protected.

Related reading: What to Do with an Inheritance in Ontario, Term vs. Whole Life Insurance, Corporate Life Insurance in Ontario, and A Step-by-Step Retirement Planning Guide for Ontario Couples. Learn more about working with a financial advisor in London, Ontario.