One day, you are going to die.
It's an uncomfortable truth, but one we must all eventually accept. For many Canadians, the natural fear of death means they are often reluctant to plan for what happens to their financial affairs after they have passed on.
The reality is that when a loved one dies, their family is often saddled with many unexpected expenses. And all too often, people don't think about what their death might cost those closest to them, and for obvious reasons, it's not something they want to talk about.
But while the thought of planning what happens to your affairs after you die might be upsetting, a little planning can lessen the financial and emotional burden for those closest to you.
"Things go much more smoothly for families when thoughtful plans are in place to settle financial and personal affairs, including the planning of your funeral," said Colleen Stewart, a regional Private Trust Manager at TD.
Plan and document your wishes
According to a 2023 survey by polling firm Angus Reid, half of Canadians do not have a Will. Without a Will, provincial laws determine how to distribute the deceased's assets. If the deceased lived in Ontario, for example, Ontario's Succession Law Reform Act would inform how their estate is settled. This can include big ticket items such as real estate and cars, to prized personal possessions such as artwork, jewellery and furniture.
“We like to recommend that people begin estate planning as soon as they reach the age of majority,” said Nicole Ewing, Director of Tax and Estate Planning at TD Wealth.
“Estate planning should be a holistic exercise that takes into consideration your unique circumstances and objectives and often involves a Will, Power of Attorney for both property and personal care, beneficiary designations on registered plans and insurance policies, trusts, marriage contracts, and even partnership or shareholder agreements.”
Certain life events may also trigger you to begin the exercise, including having children, getting married or moving in with a partner, the breakdown of a relationship, purchasing a home, and becoming aware of a health condition that could result in death or incapacity, Ewing said.
In most cases, your spouse or children would be entitled to your estate assets, even if you don't have a Will, but how your property is shared between your surviving family members varies by province. Without a formalized plan, the important people in your life can be left with nothing and, according to Stewart, may be forced to undergo a long and drawn-out process that is more expensive than would be the case if you'd made a Will.
Stewart recalls settling one estate without a Will that involved multiple beneficiaries, many of whom were more remote relatives the deceased never met, which might not have been the deceased's intention. Additionally, if you want to give something back to your community or a charity, those wishes also must be documented because those types of gifts are rarely made where there is no Will.
That’s why sharing your plans with your family ahead of time can help avoid unfortunate outcomes. Rather than assuming your children want certain assets, Ewing recommends confirming their interest.
“For example, your children may not want to inherit the family cottage if it means sharing it with siblings. Or they may prefer you decide who gets certain sentimental items rather than leaving them to argue over those items in the future,” Ewing said.
“Making sure your family understands why you're making certain decisions can go a long way toward maintaining family harmony after you're gone.”
Review your estate plan often
Creating a Will is often not enough to ensure your intentions are met, Stewart said. So how often do you need to review any formal estate planning documents? If you guessed once, maybe twice in your lifetime, you may be surprised.
Significant life events such as a marriage, divorce, the birth or adoption of a child, the death of an individual named in your estate plan, a move to another province or out of country, or a substantial change to the value of your assets are all reasons to potentially update your documents. In general, Stewart recommends reviewing your estate plan every three to five years to ensure it still reflects your wishes.
Another way you can prepare for death is to pre-plan what may be arguably one of the most important gatherings of family and friends in your lifetime: your funeral.
Funerals are expensive. And all those “extras” will cost you.
Individuals and families can expect to spend up to $10,000 or more on a funeral, Stewart said, a number that varies depending on the services included.
While some fees, like a casket or urn, are somewhat expected costs, other items such as the embalming of the body, transfer of remains, flowers, death registration and certificates, cemetery plots and mausoleum space, venue fee and catered receptions, are often additional costs.
And if you have extravagant taste, the desire for a deluxe funeral will cost substantially more.
Planning what you want to happen to your body and what sort of service you would like after you pass also means taking the guess work away from those you love, Stewart said.
Parting words
For those looking to ensure their financial affairs are in order before they die, Stewart stresses the importance of being knowledgeable about the costs associated with death, such as funeral arrangements, and having open discussions with family in advance. Ensuring your estate planning documents are up to date and capturing your wishes can also ease what can be a difficult time for your loved ones.
Ewing also recommends engaging professionals in the estate planning process to help ensure everything is in place.
For those who find themselves as the executor of a loved one's estate in the event of a death, the process can often be complicated. Contacting a TD Will and Estate Planning professional can often be of great help during difficult times. You can learn more about TD wealth planning services here.