Will and Estate Planning Guide - TD Waterhouse

Private Trust
Will and Estate
Planning Guide

This Guide was created for you
You have planned well and worked hard to achieve your goals. Now, you want to be sure that your
affairs are handled properly in the future. At this time in your life, estate planning should be an
essential part of your comprehensive financial plan. Whatever the complexity or size of your estate
(the value of your family home, investments, RSPs/RIFs, life insurance and other assets can make it
larger than you might think), developing your estate plan and preparing a Will are two of the most
important things you can do to protect your family and your legacy.
At TD Waterhouse Private Trust 1 , we have helped make the process of preparing for the transition of
your wealth simpler by developing this Will and Estate Planning Guide. The information it contains
will provide you with an overview of Will and estate planning, and an understanding of how we can
help you through all stages of the process – from planning your estate now, to distributing it
according to your wishes, years from today.
People and expertise you can trust
Wills and estates have been an important part of our service for over one hundred years. Our experienced
advisors receive comprehensive training and work with skill, empathy, and professionalism. We listen and
work hard to understand your needs so that you can meet the estate objectives you have set.
Our commitment
We are committed to –
• providing professional and compassionate treatment of your beneficiaries
• protecting your assets and helping ensure your investments are managed prudently
• helping ensure that your wishes are carried out
• settling your estate in a timely and efficient fashion
We’re here to help
If you are considering naming us as Executor, our estate planning team will work with you and your legal
advisor to develop a comprehensive estate plan. We will help ensure that your final plan delivers on your
wishes, preserves your assets, and enhances your estate’s value for your beneficiaries.

Table of Contents
Why is estate planning so important? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What is involved in estate planning? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Know what you have . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Decide what your estate plan should achieve . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Choose how you want your estate distributed . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Determine how to accomplish your objectives . . . . . . . . . . . . . . . . . . . . . . . . . 7
Benefits of The Canada Trust Company as Executor . . . . . . . . . . . . . . . . . . . . . . . 11
Our Organization as Executor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Our Organization as Co-Executor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Our Organization as Alternate Executor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Our Organization as Agent for Executor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Getting started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Why is estate planning so important?
The realization of the goals you have set in life – goals such as your children’s education, your family’s
economic independence, continuity of a family business or your support for charities – are continued through
your estate plan. Your plan, including an up-to-date Will, sets out your vision for how you want your assets
distributed after your death, and ensures that your wishes for your family and estate are carried out.
If you were to die without a Will, your estate could face the following consequences –
• the distribution of your property would be governed by a legislated formula
• the person with authority to administer your estate would not necessarily be someone you would
have chosen
• the cost of administering your estate could be higher, and distribution to your beneficiaries could
be delayed
Clearly, it is important for your peace of mind, and your family’s future, that you develop an estate plan as part
of your complete financial plan.
1

What is involved in estate planning?
This section reviews the four steps involved in developing your estate plan – itemizing your assets and
liabilities, deciding what your estate goals are, choosing how you want your estate distributed, and determining
how to accomplish your objectives.
When you are ready to begin the planning process, we can provide you with our Will & Estate Personal
Planner. It contains worksheets that will make it easier to compile the required information and outline your
wishes. We would be pleased to work with you to complete the Personal Planner, or, you may prefer to
complete it on your own before meeting with one of our Estate and Trust Specialists.
1. Know what you have
Before you can establish your estate plan, you must know what your assets and liabilities are, to get an idea of
what your estate is worth. Your list of assets might include –
• investments such as stocks, bonds, GICs and mutual funds
• RSPs, RIFs, RESPs, annuities and pensions
• real estate
• personal property such as cars, jewellery, art and antiques
• business interests
• insurance policies
It is important to know not only what you own, but how you own it, because the form of ownership and
designated beneficiaries will influence your estate plan. You will want to identify assets you own jointly
with your spouse or another person, and who are the designated beneficiaries of your RSPs, pensions, and
insurance policies.
2. Decide what your estate plan should achieve
How you structure your estate plan depends on what you want to accomplish. For example, an older couple in
retirement without dependant children will have a different set of objectives than a younger couple with
children, or a single person. Each situation is unique. Many people make a list of what they want to achieve
with their estate plan, and a separate list of issues and problems they want to avoid.
2

What is involved in estate planning?
While your goals are unique to your situation, here are some common objectives you may wish
to consider –
• maximizing the value of your assets
• providing for loved ones
• helping to secure responsible guardians for your children and dependants
• ensuring appropriate Trustees for your children’s and dependant’s trusts
• distributing assets according to your wishes
• making sure your estate has sufficient liquid assets to pay taxes and other liabilities after your death
• communicating the values that are important to you and that you wish to see continued
As well, there are some common problems you will want to avoid –
• financial burden for your family
• loss of assets
• delays in settling your estate
• taxation of your estate
• unnecessary costs
• disharmony in the family
3. Choose how you want your estate distributed
One of the decisions that you must make in planning your estate is deciding what to leave and to whom.
However, it is also important to decide in what manner you want your assets distributed.
This section outlines the four basic distribution methods – gifting, living trust, distribution through your estate,
and distribution outside your Will. Factors such as your financial situation, your tax plan, and your probate
plan will have a bearing on which method you choose. In all likelihood, your estate plan will incorporate a
combination of these methods to accomplish your objectives.
Gifting Assets Before Death
Gifting assets means passing them on to your beneficiaries while you are still alive. This method can allow
you to reduce costs when your estate is being administered. However, there are other factors that should be
considered such as potential capital gains tax and losing control over the assets that are gifted.
3
Although gifting assets can reduce the tax liability of your estate, this distribution method needs careful
consideration. If you decide to gift assets, we can help ensure that this choice will effectively minimize taxes.

What is involved in estate planning?
Living Trusts
A trust is a legal arrangement in which you place property “in trust” for the benefit of one or more
beneficiaries and name a Trustee to manage the trust.
There are two types of trusts – living trusts, also called “inter-vivos” trusts, and testamentary trusts. A living
trust is established during your lifetime. A testamentary trust is outlined in your Will, and takes effect only
after your death. You’ll find more about testamentary trusts on page 5.
There are different reasons why people choose to establish a trust. Among them are –
• to provide long-term income or care for minor children, dependants, or family members with special needs
• to safeguard your property and assets for your beneficiaries
• to provide lasting donations to charities and other organizations
• to reduce probate fees
These are just a few reasons – there are others, each with its own implications. Establishing and administering
a trust requires professional assistance to help ensure that it meets your needs and requirements.
4

What is involved in estate planning?
Distributing Assets Through Your Estate
Distribution of assets that fall under your estate will be outlined in your Will. There are two ways assets
designated in your Will can be distributed – immediately or through testamentary trusts.
Immediate Distribution –
Immediate distribution means that your Executor, following your wishes, distributes all or part of your estate
to your beneficiaries after all outstanding debts are paid and any tax issues with Canada Revenue Agency are
resolved. While this method of distribution allows you to maintain control over these assets in your lifetime,
there may be negative tax implications for your estate.
Upon death, assets in your estate are generally considered, for tax purposes, to have been sold. This means any
resulting tax on capital gains may have to be paid. Unless your estate has liquid assets available to pay this tax,
you could be leaving your estate and beneficiaries with a tax burden, or the estate may be required to sell an
asset to meet the tax obligations.
It is important to know that a Will often needs to have been “probated” in order to distribute assets through the
estate. Probate is a court process that –
• confirms your Will is valid
• confirms the Will presented is the “Last Will and Testament”
• confirms the authority of the Executor to administer the estate and distribute the assets
• is not required for Quebec Notarial Wills
Probate fees are payable to the court and vary by province. In some provinces, they are based on a percentage
of your estate value, while in other provinces they are flat fees, or a combination of both. These fees are
usually paid from the proceeds of your estate.
Testamentary Trusts –
Testamentary trusts are outlined in your Will and take effect upon your death. A testamentary trust provides for
a named beneficiary to receive payments of income at any frequency you choose. The trust can also reserve
the capital for specific purposes and direct how it is to be used. The Trustee who will administer the trust
should be qualified, competent and willing to perform the many tasks required to ensure that your wishes are
carried out.
5

What is involved in estate planning?
There are many reasons for the creation of a testamentary trust. Some examples include –
• to ensure that the money and/or other assets are well-managed
• to comply with the laws regarding leaving money to children under a certain age
• to provide for specific purposes such as a child’s education
• to ensure that funds being left to benefit a person who is not capable of managing money will last over
many years
• to provide for children from a previous marriage while providing for your present spouse during his or
her lifetime
Trusts are complex and there are a number of considerations to take into account. We recommend that you
consult us for help in planning, establishing and administering trusts.
Distributing Assets Outside Your Will
Many people include probate fees as part of their estate planning exercise. If probate fees concern you, you
may be able to lower them by reducing the number of assets that fall under your estate. Examples of assets
that may not be subject to probate include –
• RSPs, RIFs
• life insurance proceeds
• pension plan proceeds
• assets that are owned jointly
Registered plans, life insurance and pensions may not be subject to probate fees provided there is a
specific beneficiary (allowed in most provinces) named in your Will, or designated directly with the plan
or policy administrator.
Joint ownership of assets generally means that the asset will pass directly to the survivor, again, without
passing through the estate.
Although distributing assets outside your Will could help to minimize probate fees payable, there are
complexities. For example, joint assets can be subject to tax laws, provincial family laws, and estate
taxes and liabilities. We will be pleased to suggest ways to optimize your estate plan with respect to
non-probatable assets.
6

What is involved in estate planning?
4. Determine how to accomplish your objectives
Prepare Your Will
Your Will is the most important component of your estate plan. In fact, few documents are as significant.
Dying without a Will, also referred to as dying “intestate,” can have unintended consequences. If this were to
happen, your estate would be distributed according to the intestacy laws in your province. All provinces have
specific rules as to how an estate is to be divided among the living heirs of the deceased. The end result may
be quite different than what you would have wanted, particularly where there are minor children involved.
The absence of a Will can also delay the distribution of your estate, resulting in inconvenience or even
financial difficulty for your beneficiaries. Also, your estate may incur unnecessary administration costs.
If you do not already have a Will, you should prepare one after you have considered all the aspects outlined so
far. Our clients typically have their own lawyer draft their Will based on the estate plan we have helped
develop. Should you wish, we can work with your lawyer. Once the Will is written, we will review it with you
to confirm that all your goals have been met.
In addition to providing instructions for distributing your estate, your Will is the document where you can
name your choice of a guardian for your minor children. While the designation is not legally binding, naming
a guardian in your Will lets the court know who you want to care for your children, and may influence the
court’s permanent appointment.
Once completed, your Will should be held in safekeeping. The Canada Trust Company will hold Wills for
safekeeping in our vault as a complimentary service for clients who have appointed us as their Executor. Most
of our clients prefer this option, as the Will is then available for review, upon request.
It is important that your Will be kept up-to-date. Generally, your Will should be reviewed every three to five
years, or whenever there are significant changes in your personal or financial circumstances, or those of your
beneficiaries. In addition, changes in the laws of your province may affect your estate plan. You may contact
our Estate and Trust Specialists whenever you wish to review your Will.
7

What is involved in estate planning?
Prepare a Power of Attorney
Part of a complete estate plan includes planning for possible illness, accident, or other disability that leaves
you unable to manage your affairs. A Power of Attorney 2 for property is a legal document that empowers
another person to manage your financial affairs during your lifetime. In addition, in some provinces, it is now
possible to name a Power of Attorney for personal care, which allows you to name someone to make decisions
on your behalf concerning nutrition, shelter, clothing and consent for medical treatment should you become
incapable of doing so.
Before you prepare a Power of Attorney, a lawyer should be consulted so that you fully understand the powers
that your designated attorney will have, and the circumstances under which the Power of Attorney can be
activated or terminated. If you wish, The Canada Trust Company can be named as your Power of Attorney
for property.
In all cases, Powers of Attorney terminate upon your death, at which time your Will takes effect.
8

What is involved in estate planning?
Choosing A Qualified Executor
An Executor is one or more individuals or a trust company, appointed in your Will to administer and distribute
your assets after your death. Your Executor might be –
• your spouse
• your children
• a family member
• a friend or business associate
• your lawyer/accountant
• The Canada Trust Company
Many people believe they are bestowing an honour on family members or friends by naming them Executor.
In fact, very few truly understand the duties of an Executor and the difficulties that this obligation can bring
to an inexperienced person. Often, the burden is imposed at a time when the level of stress for the family is
already high. So after all the effort you put into
planning your estate, be sure to appoint someone
who is qualified to carry out your wishes. Some of
the duties of an Executor are listed below –
• locate, safeguard, itemize
and value all assets (including
foreign property)
• provide for immediate management of all
assets, including business interests and
investment portfolios
9

What is involved in estate planning?
• redirect mail and cancel leases, subscriptions and memberships
• arrange for probate of the Will
• advertise for creditors
• re-register the ownership of assets
• raise cash to pay debts, taxes, and legacies
• keep proper estate records
• distribute assets to beneficiaries
• prepare and file numerous tax returns
• set up and administer all trusts as Trustee
Being an Executor is a complex job that includes some risks. For example, Executors can be personally liable
for errors made in administering the estate. In addition, Executor duties can last for months or years,
particularly in cases of trusts or more complicated estates and family situations.
A qualified Executor should have –
• knowledge of estate administration and taxation
• knowledge of estate and trust law
• financial expertise
• time and availability
• trustworthiness
• good judgment
• impartiality
• experience working with families
• the ability to build consensus
The Executor, whether family member, friend, or professional, is entitled to claim fees based on a percentage
of your estate’s value, as set by the courts, or by agreement. Often, when we are named as corporate Executor,
our expertise in estate administration can result in savings in taxes and other costs that more than offset any
Executor fees.
10

Benefits of The Canada Trust Company as Executor
Estate administration is not a simple task. We encourage you to consider appointing The Canada Trust
Company as your Executor, Co-Executor, Alternate Executor, or Agent for your Executor. 1 A matter as
important as the distribution of your estate should be left to specialists so you can feel confident that your
wishes will be carried out.
Our expertise includes –
• advice and administration in tax, trusts and asset management 3
• experience in dealing with complex estate issues
• understanding of your wishes and the needs of your beneficiaries
• impartiality
• full-time resources to help ensure the timely settlement of your estate
Our Organization as Executor
As your corporate Executor, we will handle all of the duties that come with being an Executor.
11

Benefits of The Canada Trust Company as Executor
Our Organization as Co-Executor
Even if you have someone else in mind to name as your Executor, we can still assist in your estate planning
and administration if you name The Canada Trust Company as Co-Executor. As Co-Executor, we will act in
conjunction with another named Executor and assume the duties of administration.
You will receive the benefit of our experience as we attend to all of the administrative responsibilities, while
the other Executor (perhaps a family member or friend) shares in all decision-making, and provides their
personal insight, direction and advice.
Our Organization as Alternate Executor
When two people (usually spouses) name each other as Executor, The Canada Trust Company can be named to
act as Alternate Executor when the surviving spouse dies, or is unable to fulfill the obligation as primary
Executor. Naming us as Alternate Executor will give you peace of mind in knowing that whatever happens,
you will have an Executor to settle your estate.
Our Organization as Agent for Executor
Finally, we would like to mention that The Canada Trust Company can also act as Agent for Executor.
This designation allows us to act as Agent for you if you happen to have been named Executor for someone
else’s estate and you need assistance in distributing assets, ensuring investments are managed and dealing with
tax matters.
If you wish to discuss your personal estate plan with an Estate and Trust Specialist, please contact your local
TD Canada Trust branch, or one of our offices, for a no-obligation consultation.
12

Getting started
The estate planning process begins with understanding what is in your estate and how you wish it to be
distributed. To assist you with this, we would be pleased to provide you with our Will & Estate Personal
Planner. It contains worksheets that help you itemize your assets and outline your wishes in preparation for
your Will. You can complete the Planner on your own, or with our help. To receive a copy, please speak to a
Private Trust Estate and Trust Specialist.
Collecting the following personal records, financial records and legal documents before you begin the estate
planning process will make it much easier –
■ address book
■ real estate documents
■ bank account statements and/or passbooks ■ Power of Attorney documents
■ credit card, loan, and mortgage statements ■ your current Will
■ investment account and RSP/RIF statements ■ your living Will
■ safety deposit box information
■ family trust agreement
■ vehicle ownership(s)
■ alter ego/joint partner trust agreement
■ recent tax returns
■ marriage contract, domestic or pre-nuptial agreement
■ insurance policies
■ separation agreement and/or divorce documents
13

Glossary
Here are some terms you may come across in this
Guide or in the estate planning process.
Administrator: a person appointed by the court who
administers the estate of a person who died intestate
(without a Will).
Alternate Executor: when two individuals (generally
spouses) name each other as Executor, The Canada
Trust Company can be named to act as Alternate
Executor when the surviving individual dies or is
unable to fulfill the obligation. (Also known as
contingent Executor.)
Beneficiary: a person (or organization or charity) who
receives a benefit under a Will or financial plan such as
a life insurance policy or annuity.
Capital gain: profit realized on the sale of an asset or
the profit deemed to be realized as if the asset had been
sold at the time of the owner’s death.
Codicil: an amendment which modifies the terms of a
Will. A codicil is useful for relatively minor changes.
For extensive revisions, it is best to have a new Will
drawn up which incorporates the changes you wish and
revokes any previous Wills.
Contingent beneficiary: an individual whose interest
in an estate is dependent upon the occurrence of some
future event which may or may not happen (e.g. the
person you name to receive the residue of your estate
should your spouse and children predecease you).
Encroachment: the payment of capital funds being
held in trust for a beneficiary to the beneficiary at the
discretion of the Trustee.
Estate: the sum total of a person's assets and liabilities
while living or at the time of death.
Executor (male) or Executrix (female): the person or
trust company appointed in a Will to control and protect
the estate’s assets, pay off any debts and distribute
property as directed by the Will. The value and
complexity of your assets and the length of time
required to administer your estate are important
considerations in choosing an Executor or Executrix.
Guardian: the person or persons appointed by the
court to have custody of minor children and their
assets. While naming a guardian in your Will is not
legally binding, it may influence the court’s
appointment. If you have young children (or a
dependent who is unable to function independently
because of a mental or physical disability), it is highly
recommended that you designate a guardian in
your Will.
Inter-vivos trust (living trust): a trust created by a
trust deed signed by a living person. See Trusts.
Intestate: dying without a Will, or the term given to a
person who dies without having made a Will or
testamentary disposition of his or her property.
Issue: descendants of a person, including not only
children but grandchildren, great-grandchildren and
more remote descendants.
Joint tenants: two or more individuals who hold
equal interests in a property. Upon the death of one
of the owners, the remaining owner(s) are entitled to
the property.
14

Glossary
Legacy: a gift of personal property transmitted by
a Will.
Net worth statement: the balance sheet which shows
what you own, assets – and what you owe, liabilities.
Assets minus liabilities tells you what your net worth is –
and that is the starting point for your estate planning.
Personal property: all property except for real estate
and buildings; also known as “personalty” (as opposed
to “real property” or “realty”).
Personal representative: the individual
administering an estate whether an Executor/Executrix
or administrator.
Principal residence: a qualifying home within the
meaning of the Income Tax Act (Canada); generally,
the home ordinarily inhabited by an individual and/or
their spouse.
Probate: the official confirmation of a Will by
the courts, confirming the Executor’s or Executrix’s
legal authority.
Probate plan: a strategy for minimizing fees payable
to the court for validating your Will.
Real property: land and buildings; also known as “real
estate” or “realty.”
Residual beneficiary: the beneficiary to whom the
residue of the estate is left.
Specific bequest: a gift under a Will of a specific item
of personal property or a specific cash amount.
Tenants-in-common: two or more individuals who
hold undivided percentage (%) interests in a property.
Upon the death of one of the owners, their interest in
the property forms part of their estate and does not pass
automatically to the remaining owners.
Testator (male) or Testatrix (female): the person
who makes the Will.
Testamentary trust: a trust created by a Will.
See Trusts.
Trustee: one who manages property or money
for another.
Trusts: a legal structure whereby a Trustee deals with
property or assets, e.g., cash, stocks, bonds, etc., over
which the Trustee has control, for the benefit of persons
called beneficiaries. There are two main types of trusts:
living trusts and testamentary trusts. These trusts serve
different purposes and objectives and can have different
tax implications.
Will: the legal statement of a person’s wishes
concerning the disposal of his or her property after
death. Some assets can be passed on without a Will –
for example, jointly-owned assets such as a home, life
insurance proceeds, and, in some circumstances,
registered funds, annuities and pensions.
Residue: that portion of an estate remaining after all
debts, taxes and expenses have been paid and all
specific bequests and specific devises have been made.
15

1 TD Waterhouse Private Trust services are offered by The Canada Trust Company.
2 Power of Attorney is variously described, in different provinces, as a continuing, enduring, durable Power of Attorney or, in the Province of Quebec, mandate given in anticipation of the mandator’s incapacity.
3 Investment management can be provided by TD Waterhouse Private Investment Counsel Inc., a subsidiary of The Toronto-Dominion Bank.
TD Waterhouse is a trade-mark of The Toronto-Dominion Bank, used under license.

Gain peace of mind and help
secure your family’s future.
Contact us to arrange a meeting
with a Private Trust
Estate and Trust Specialist.
We have offices across Canada.
For the location nearest you,
call 1-866-858-0133,
visit www.tdwaterhouse.ca
or ask at any TD Canada Trust branch.
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