Guide to Succession Planning for Effective Inheritance of Your Estate

You can set out the age to be reached by the heirs to receive their share

Be aware that you can determine in your will the age at which your heirs, including your children, will be able to receive their share of inheritance. The distribution period may even be spread over several years.

Funeral pre-arrangements

When funeral pre-arrangements have already been made, it is best to leave written instructions to this effect or mention them in your will.

Did you know that there is a register for prearranged funeral contracts?

Deceased person who left no descendant, married or civil union spouse, father, mother, brother, or sister behind, but left behind ordinary ascendants or ordinary collaterals.

The Civil Code of Quebec contains provisions governing the distribution of property of a person who died without a Will, by first giving priority to the closest relatives of the deceased, then gradually including more distant relatives of the deceased. All these provisions are known as the legal devolution.

Deceased person whose father, mother, brother and/or sister are still alive.

The Civil Code of Quebec contains provisions governing the distribution of property of a person who died without a will, by first giving priority to the closest relatives of the deceased, then gradually including more distant relatives of the deceased. All these provisions are known as the legal devolution.

Deceased person who did not leave descendants behind, but left behind a spouse to which he was married or civilly united.

The Civil Code of Quebec contains provisions governing the distribution of property of a person who died without a Will, by first giving priority to the closest relatives of the deceased, then gradually including more distant relatives of the deceased. All these provisions are known as the legal devolution.

Deceased person who left descendants behind (children or grandchildren).

The Civil Code of Quebec contains provisions governing the distribution of property of a person who died without a Will, by first giving priority to the closest relatives of the deceased, then gradually including more distant relatives of the deceased. All these provisions are known as the legal devolution.  

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Your wealth planning

If you do not plan for the transfer of your wealth in your will, then the Civil Code of Quebec will decide on the distribution of your assets upon your death.

A Will planning is necessary

You have planned for the management of your wealth throughout your life, a Will and estate planning is now necessary.

Trust will

The Trust will is a legal instrument by which a person, the testator, transfers, upon his death, his property into another partimony that he creates (trust estate). The trustee will manage the property in accordance with the provisions of the trust will and in the best interest of the beneficiaries.

Creating a testamentary trust

The creation of a testamentary trust may be appropriate in the following cases:

• Bequeath money to minor children or grandchildren;
• Saving a spouse the worry and hassle of managing his inheritance;
• Ensuring sufficient income to the surviving spouse until his death and stating that the remaining capital of your estate will then be transferred to the children or grandchildren;
• Making an important bequest to the benefit of a vulnerable person or prevent an heir from squandering his inheritance.

The heirs of a member of a professional body

Note that it is important for the heirs of a member of a professional body to ensure that errors and omissions liability insurance be maintained even after the death of the latter.

Appointing a person to take over your business.

Did you know that, if you are a business owner, you can designate in your will the person who will be able to take over and ensure the operation of your business?

Appointment of a tutor/guardian by will

Did you know that parents can designate a tutor for minor their children by will? If such a clause is not set out in the will and both parents are deceased, a meeting of family members should be held to choose a tutor/guardian for their minor children.

Funeral pre-arrangements

If you have already made funeral pre-arrangements, it is best to leave written instructions to this effect or mention them in your will.

Did you know that there is a register for prearranged funeral contracts?

Indivision agreement among joint purchasers of a real estate property

To avoid any possible issues when buying a property jointly with other people, it is useful to sign an indivision agreement among joint purchasers or co-buyers.

Cohabitation agreement

The cohabitation agreement is a legal document by which you can particularly set out, on a contractual and consensual basis:

• The nature of your economic relationship;
• The beginning of your life together;
• The ownership of property acquired during the common-law union;
• The provisions for the name and maintenance of your children, as well as the custody and support of the latter in the event of a separation.

Indivision agreement among co-owners of a building

To avoid any inconvenience that may occur when buying jointly with others, it is useful to sign an indivision agreement among joint purchasers or co-buyers.

The real estate guide

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Click here to view our legal guide for a real estate purchase

Drafting and registration of a declaration of family residence

A spouse, to protect his/her rights, may, if desired, register a declaration of family residence pursuant to the Civil Code of Quebec.

Cohabitation agreement

Common-law partners or de facto spouses are free to enter into agreements among themselves in order to specifically agree on what rights and obligations will flow as a result of their relationship and the possible end of their relationship. Obviously taking into account public policy rules, common-law spouses can create written contracts or agreements to protect their rights while they are in a relationship and upon the end of their relationship.

Warning!

This guide is intended for adults.

To avoid any misunderstanding

The masculine form is used herein for the sole purpose of brevity and no discrimination is intended.

Tax-Free Savings Account (TFSA)

If you contribute to a TFSA, you:

• Save investment income or returns tax-free in an eligible investment account;
• Ensure financial security for yourself and your family.

Registered Retirement Savings Plan (RRSP)

If you leave your RRSP to a relative other than your spouse, the amount accrued in your RRSP will then be taxed as if you had cashed it in the year of your death

Registered Retirement Savings Plan (RRSP)

If you contribute to a RRSP, you will:

• Reduce the amount of tax payable.
• Ensure financial protection for you and your family.

Life insurance

When you take out a life insurance policy with a designated beneficiary, the proceeds thereof will not be part of the assets of the deceased's estate and the designated beneficiary will directly receive the proceeds of such insurance policy.

In contrast, the proceeds of a life insurance policy that do not contain a designated beneficiary or that are payable to the estate are included in the assets of the deceased's estate

Life insurance

In order to provide financial protection for your loved ones, you can take out a life insurance policy which will enable you to leave a substantial non-taxable inheritance to your family members.

Spousal rollover

The only way to bring down the tax payable on your estate to zero is to bequeath everything to your spouse. If you leave all your property, including your real estate properties, RRSP, RRIF, TFSA, to your spouse or common-law partner, there will be no tax payable on your estate. The tax payable will therefore be deferred to the spouse's estate through a tax mechanism commonly referred to as spousal rollover.

If you are separated, divorced, widowed or single, things can get complicated, depending on the assets you are leaving. Here is an overview of the main tax rules that apply to most common legacies for the majority of people.

The rights of a common-law partner

The Civil Code of Quebec grants the surviving spouse no right in the property of a deceased common-law partner/de facto spouse. This means that, regardless of the number of years of life together, the surviving spouse will inherit the property of a deceased common-law partner/de facto spouse only if a Will was made to his/her benefit.

Learn more about the rights of common-law partners/de facto spouses

the signing of a new protection mandate in case of incapacity is necessary

You have been planning for the management of your wealth throughout your life, reviewing your planning in case of incapacity is now necessary.

Make yourself online your protection mandate in case of incapacity

The consequences for a person who becomes incapacitated without a protection mandate

• If a person becomes incapacitated without a protection mandate, such person and his/her property will be taken care of and managed by a tutor or a curator.
• Without a protection mandate in case of incapacity, the institution of protective supervision will be required, and the resulting situation will perhaps not be the one you would wish for.
• Thus, protective supervision can be more burdensome as the designated tutor or curator will have to render accounts to a tutorship council, which must be created, as well as to the Public Curator of Quebec.

Agreement of the persons appointed as mandataries

Prior to the signing of a "mandate", it is best to always ask the persons you wish to appoint as your mandataries if they would agree to act as such in the event of your incapacity.

Appointment of a tutor/guardian

Parents may appoint a tutor/guardian for their minor children through the protection mandate in case of incapacity or by a statement to the Public Curator of Quebec. If this appointment is not set out in these documents and both parents are deceased or incapacitated, a meeting of family members will be held to choose a tutor for your minor children.

In the event of your incapacity, provide for the use of your assets for the welfare of your spouse and your children

In case of your incapacity, and if you want your mandatary to use your assets to address the ongoing needs of your spouse and children and ensure their welfare, you must expressly specify such use in your protection mandate in case of incapacity.

In the event of your incapacity, provide for the use of your assets for the welfare of your spouse

In case of your incapacity, and if you want your mandatary to use your assets to address the ongoing needs of your spouse and ensure his/her welfare, you must expressly specify such use in your protection mandate in case of incapacity.

In the event of your incapacity, provide for the use of your assets for the welfare of your children

In case of your incapacity, and if you want your mandatary to use your assets to address the ongoing needs of your children and ensure their welfare, you must expressly specify such use in your protection mandate in case of incapacity.

Appointing a person to take over your business

Did you know that, if you are a business owner, you can appoint, in your protection mandate in case of incapacity, the right person to take over or carry on your business, or even to liquidate or sell your business?

Congratulations on your foresight!

Transfer of your various passwords

To avoid hassle to the mandatary to property of an incapacitated person and to preserve the confidentiality of the deceased's life, some approaches are currently available on the Web, even if they are not perfect or not entirely problem-free:

• the digital safe which allows you to transfer to the person appointed by the deceased or the incapacitated person all the digital data of the deceased or incapacitated person, such as its user IDs, access codes and passwords; and
• the storage by the deceased during his/her lifetime, or by the incapacitated person, while he/she was still able to do it, of all of its digital documents and files or digital data in a storage space rented on a specialized website.

Signing a protection mandate in case of incapacity is necessary

You have planned for the management of your wealth throughout your life, the planning in case of incapacity is now necessary.

Make yourself online your protection mandate in case of incapacity

You have planned for the management of your wealth throughout your life, the signing of a protection mandate in case of incapacity is now necessary.

Congratulations! Keep doing so, as this is the best way to proceed.

Wealth inventory and assessment

The contents of a wealth inventory and assessment worksheet should reflect, as accurately as possible, the current situation of your wealth, namely the information and location of your assets and your liabilities as well as an overview allowing you to determine the value of your wealth.

General power of attorney

• It is possible to attach a power of attorney to your protection mandate in case of incapacity.
• It allows your mandatary, among other things, to administer your property pending the Court decision during the homologation proceedings for your protection mandate in case of incapacity.

Congratulations, you are well informed!

Reviewing your documents

• The review of your documents should be in connection with your personal and family situation.
• Ideally, whenever an important event occurs in your life, your will and protection mandate in case of incapacity should be reviewed to ensure their relevance.
• For example, the birth of a child, a marriage, separation, divorce, serious illness, death, or a new relationship.

Shareholder buy-sell agreement

This document allows you to organize the administration of your business corporation and plan for the disposal of the shares upon the death or withdrawal of a shareholder from the corporation.

Congratulations, you are proactive and well organized!

Life insurance

• To ensure the financial protection of shareholders, a life insurance is used to finance the purchase of shares of a deceased shareholder.
• The insurance policies on the life of each shareholder of a corporation can be taken and kept in force by the business corporation upon payment of the premiums to this effect.
• A life insurance should, where possible, be taken out for an amount representing the valuation of the shares held by each shareholder.

Congratulations, you are proactive and well organized!

Disability insurance

Why not apply for disability insurance? There are disability buy-sell insurance or critical illness insurance which allow the beneficiary of such insurances to withdraw a cash amount which can be used to pay for the shares of a shareholder becoming seriously ill or disabled.

The benefits of having a protection mandate in case of incapacity

• The protection mandate in case of incapacity allows you to choose one or more mandataries and to specify the powers entrusted to them.
• It is actually possible to appoint a mandatary to the person and a mandatary to property.
• You can also specify what kind of medical treatment you wish to receive or not receive, if any, and avoid aggressive therapy and agressive diagnostic measures.
• In case of incapacity, your close relatives will have in hand the document indicating what type of care and what kind of treatments you wish to receive.

Congratulations, you are well organized!

Transfer of your various passwords

To avoid hassle to the mandatary to property of an incapacitated person and to preserve the confidentiality of the deceased's life, some approaches are currently available on the Web, even if they are not perfect or not entirely problem-free:

• the digital safe which allows you to transfer to the person appointed by the deceased or the incapacitated person all the digital data of the deceased or incapacitated person, such as its user IDs, access codes and passwords; and
• the storage by the deceased during his/her lifetime, or by the incapacitated person, while he/she was still able to do it, of all of its digital documents and files or digital data in a storage space rented on a specialized website.

Congratulations on your foresight!

Appointing a person to take over your business

Did you know that, if you are a business owner, you can appoint, in your protection mandate in case of incapacity, the right person to take over or carry on your business, or even to liquidate or sell your business?

Possible use of your assets by your children in the event of your incapacity

In the event of your incapacity, your mandatary could allow your children to use your assets for their own welfare, but only if it was provided for in your protection mandate in case of incapacity.

Possible use of your assets by your spouse in the event of your incapacity

In the event of your incapacity, your mandatary could allow your spouse to use your assets for his/her own welfare, but only if it was provided for in your protection mandate in case of incapacity.

Possible use of your assets by your spouse and your children in the event of your incapacity

In the event of your incapacity, your mandatary could allow your spouse and your children to use your assets for their own welfare, but only if it was provided for in your protection mandate in case of incapacity.

Appointment of a tutor/guardian

Parents may appoint a tutor/guardian for their minor children through the protection mandate in case of incapacity or by a statement to the Public Curator of Quebec. If this appointment is not set out in these documents and both parents are deceased or incapacitated, a meeting of family members will be held to choose a tutor for your minor children.

Agreement of the persons appointed as mandataries.

Prior to the signing of a "mandate", it is best to always ask the persons you wish to appoint as your mandataries if they would agree to act as such in the event of your incapacity.

Life insurance and/or RRSPs

Why not take out life insurance and/or RRSPs? You can create wealth to pass down to your heirs or preserve your existing assets.

Congratulations, you are proactive and well organized!

Contact your financial institution

Why not contact your financial institution and apply for a secured line of credit, and you will then reduce your interest costs. Financial institutions offer the possibility to obtain a type of financing that is customized to your needs.

Congratulations!

In this way, you minimize the interest costs pertaining to your transactions.

Jewelry and artwork

To avoid any conflict, it would be appropriate to mention them in the inventory and specify their value and, if necessary, have them appraised.

Jewellery or artworks with a market value of more than $1,000 at the time of death must be reported to the tax authorities.

Wealth inventory and assessment

The contents of a wealth inventory and assessment worksheet should reflect, as accurately as possible, the current situation of your wealth, namely the information and location of your assets and your liabilities as well as an overview allowing you to determine the value of your wealth.

A Will planning is necessary

You failed to plan for the transfer of your wealth, a Will and estate planning is now necessary.

Trust will

The Trust will is a legal instrument by which a person, the testator, transfers, upon his death, his property into another partimony that he creates (trust estate). The trustee will manage the property in accordance with the provisions of the trust will and in the best interest of the beneficiaries.

Creating a testamentary trust

The creation of a testamentary trust may be appropriate in the following cases:

• Bequeath money to minor children or grandchildren;
• Saving a spouse the worry and hassle of managing his inheritance;
• Ensuring sufficient income to the surviving spouse until his death and stating that the remaining capital of your estate will then be transferred to the children or grandchildren;
• Making an important bequest to the benefit of a vulnerable person or prevent an heir from squandering his inheritance.

Appointing a person to take over your business

Did you know that, if you are a business owner, you can appoint in your will the right person to take over or carry on your business, or even to liquidate or sell your business?