Your Will Isn't the Whole Plan: How Estate Planning Actually Works in Ontario

The sentence we hear most often in an initial consultation is: "I already have a will, everything's arranged." So we ask a second question: "Who's the beneficiary on your RRSP?" Most people can't answer, or the answer is a form filled out years ago — an ex-spouse, a parent who has since passed, or a blank field.

That exchange points to the single most misunderstood idea in estate planning: what controls where an asset goes is how the asset is held and who it's designated to — not your will. A will only governs "probate assets": property with no other route of transfer. Anything jointly held with a right of survivorship, anything with a named beneficiary, anything already inside a trust, bypasses the will entirely, regardless of what the will says. A beautifully drafted will can end up controlling only a car and some furniture, if the bulk of a family's wealth sits in an RRSP, a jointly held house, and a life insurance policy.

Real planning isn't "write one document." It's mapping the transfer route for every category of asset you own, and making sure each route actually matches what you intend.

Three tools, three different timelines

People often treat a will, a power of attorney, and a trust as interchangeable, or assume more paperwork is automatically better. In fact they solve three problems that don't overlap at all.

The key point is the gap between the first two: a power of attorney ends the moment you die, and a will only starts the moment you die. There is no overlap, and neither substitutes for the other. If you lose capacity, your will is useless — you need a power of attorney. Trusts are the only tool that can bridge both periods, but in Ontario they are a targeted solution for specific situations, not the default probate-avoidance vehicle they are in many US estate plans — more on why below.

What a will can do — and, just as importantly, what it can't

A will has three functions nothing else can replace: naming a guardian for minor children, naming an estate trustee (executor) to administer the estate, and acting as a catch-all for anything not otherwise accounted for.

What it cannot do is control any asset that already has its own transfer route. That includes:

• RRSPs, RRIFs, TFSAs, and pensions with a named beneficiary;
• Life insurance with a named beneficiary;
• Real property or bank accounts held jointly with a right of survivorship;
• Assets already transferred into a trust.

We have seen this play out exactly the way you'd expect: a will says "divide everything equally among my three children," but the RRSP beneficiary form still names an ex-spouse from a marriage that ended fifteen years ago. The RRSP goes to the ex-spouse. The will's wording is irrelevant to that asset.

Probate, and why some estates try to avoid it

In Ontario, "probate" is the process of obtaining a Certificate of Appointment of Estate Trustee from the Superior Court of Justice, and it triggers the Estate Administration Tax (EAT): no tax on the first $50,000 of estate value, and roughly $15 per $1,000 above that — so a $1,000,000 estate pays approximately $14,250. The estate trustee must also file an Estate Information Return with the Ministry of Finance, and the process is a matter of public record at the courthouse.

Many Ontario estate plans use a multiple wills strategy — a primary will covering assets that require probate (like real estate and bank accounts) and a secondary will covering assets that don't (private company shares, personal effects) — so that EAT is calculated only on the primary estate. This technique was thrown into doubt by a 2018 Ontario Superior Court decision, Milne Estate (Re), 2018 ONSC 4174, which raised concerns about how the wills were drafted; the Court of Appeal for Ontario subsequently confirmed the technique's validity in 2019, and multiple wills remain a standard, court-accepted planning tool in Ontario today — but the drafting has to be done carefully enough to avoid the exact ambiguity that case flagged.

The surviving spouse's election

Ontario's Family Law Act gives a surviving spouse a choice: take under the will (or under intestacy), or claim an equalization of net family property instead, as if the marriage had ended in separation rather than death. The spouse must elect within six months of death — miss that window, and the law deems the spouse to have chosen to take under the will. For spouses in a long marriage with significant property accumulated during the marriage, the equalization claim can be worth substantially more than what the will provides, so this deadline is one of the most consequential dates in the entire estate administration.

No will? Ontario decides for you

Under the Succession Law Reform Act's intestacy rules, a surviving spouse with children receives a preferential share — currently $350,000 — plus a share of anything above that split with the children under a fixed formula. This result rarely matches what anyone actually wants, particularly where a surviving spouse needs the full estate to live on, or where children are minors: the court will require a guardian of property to hold and account for a minor's share until age 18, at which point it is paid out in one lump sum — not the staged, conditional distribution most parents would choose if asked.

The joint-account trap: Pecore v. Pecore

Adding an adult child to a bank or investment account "for convenience" is one of the most common informal estate moves we see — and one of the riskiest, because Canadian law does not work the way most people assume.

Beyond the estate dispute risk, a joint account exposes the funds to that child's creditors and, on a marriage breakdown, to a potential claim by the child's spouse — and it can trigger unintended tax consequences depending on how the transfer is characterized. If the real goal is simply "let my child help me pay bills," the right tool is a power of attorney for property, not a joint account.

Registered accounts and insurance: the beneficiary form is the will

For RRSPs and RRIFs, a designation naming your spouse allows a tax-deferred rollover under the Income Tax Act; naming anyone else means the account's full value is included as income on your final tax return in the year of death — there is no equivalent to a multi-year deferral. Life insurance proceeds pass tax-free to a named beneficiary and, done correctly, bypass both probate and EAT entirely.

Two mistakes come up repeatedly: naming a minor child directly (the insurer or plan administrator cannot pay a minor, so the funds are held under court-supervised guardianship of property until age 18, then paid out in full at once), and letting a beneficiary designation sit unreviewed through a divorce, remarriage, or a beneficiary's death. Every major change in family circumstances is a reason to check every beneficiary form you have — not just update the will.

No estate tax — but no step-up in basis either

Clients who have looked into US estate planning sometimes arrive expecting a version of the American system, and Canada's rules diverge in ways worth knowing precisely.

Canada has no estate or inheritance tax. But the Income Tax Act treats death as a deemed disposition of all capital property at fair market value immediately before death — which can trigger real capital gains tax on your final return. There are two major reliefs: the principal residence exemption, and a tax-deferred rollover for property passing to a surviving spouse or a qualifying spousal trust. Property passing to anyone else — adult children, for instance — does not get the American-style "step-up in basis." A rental property or a portfolio of appreciated stock left to a child crystallizes the accrued gain at death, and the estate (or the deceased's final return) owes the tax before anything is distributed.

This is also why, unlike in the US, the citizenship of a surviving spouse generally does not matter for the spousal rollover — it turns on Canadian tax residency, not citizenship, so a non-citizen spouse with Canadian tax residency is not disadvantaged the way a non-citizen spouse can be under US federal estate tax law.

The China piece: what a Canadian plan doesn't reach

For many of our clients, real property, bank accounts, or company interests in China fall outside anything an Ontario will or power of attorney can touch.

• An Ontario will does not govern Chinese real estate. China's succession rules under the Civil Code apply to property located there, and a separate PRC-compliant will is usually needed. The two wills must be drafted so neither accidentally revokes the other — a common and entirely avoidable drafting error.
• Authentication is simpler than it used to be. Canada joined the Hague Apostille Convention, effective January 11, 2024, which replaced the older, slower consular legalization process for documents moving between the two countries.
• Inheriting funds out of China still runs into foreign exchange controls. Even where the succession itself is straightforward, repatriating inherited funds from a Chinese bank account is subject to remittance quotas and documentation requirements that should be assessed early, not assumed away.

Private company shares: check the shareholder agreement first

Before any share transfer is planned — into a trust, into a secondary will, or to a child — the shareholders' agreement or LLC-equivalent operating agreement governs. Look for transfer restrictions, a right of first refusal, and any buy-sell provision that gives the company or other shareholders the right (or obligation) to buy out a deceased shareholder's interest at a formula price. A plan that ignores these provisions can be void against the corporation, or trigger a forced buyout nobody wanted. This is one area where the will, the corporate documents, and the shareholders' agreement all have to be reviewed together.

The mistakes we see most often

What to do this month

Pull the beneficiary designation on every RRSP, RRIF, TFSA, pension, and life insurance policy you hold, and check each one against what you actually intend today — not what you intended when you filled out the form. If you have a joint account with an adult child that was added purely for convenience, or property outside Canada that your current will doesn't mention, those are the two most common gaps worth having reviewed.