Globe Advisor’s Best of 2024: Preparing for the massive wealth transfer

It should come as no surprise that Canadians are getting older. Most baby boomers are now in their golden years while more members of Generation X are starting to enter the retirement phase of their lives. Even millennials, of whom the oldest members are now in their 40s, are not that far behind, either.

As a result, estate planning and the massive transfer of wealth – first between spouses and then between generations – are becoming top of mind for clients. Advisors have little choice but to discuss these issues with clients and their families.

Here are 10 Globe Advisor articles published in 2024 that tackle some of the estate planning and wealth transfer topics that are coming up more frequently:

Why the ‘death binder’ is becoming an essential part of estate planning

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In many couples, one spouse runs the finances and manages the household. For that reason, advisors are encouraging these spouses to draft “death binders” to help the surviving family members make sense of how things work. Death binders contain useful information including a contact list, details of the family’s assets, collectibles and bills, and even how to turn on emergency lights during a power outage.

Compiling a ‘death binder’? Here’s where to start

Christine Brunsden, president and trusts and estate practitioner at Trusted Legacy Consulting Corp. in Burlington, Ont., says many people wait to set up a binder until they’ve experienced a painful loss – either when the brush of mortality comes close or they see more years behind them than ahead of them. “They’re just not going to tackle it unless they understand the benefits and are sufficiently motivated to overcome their procrastination.”

The importance of setting money aside to pay final taxes and debts in an estate

When clients create estate plans, the focus is often on who gets which assets. But clients also need to consider an estate fund and how to pay liabilities, expenses and final taxes due upon death. “They don’t anticipate the magnitude of the tax bill,” says Tanya Butler, a trust and estate practitioner at Touchstone Legal Inc. in Dartmouth, N.S. “They don’t think about the expenses, such as preparing a property to sell.”

How transferring wealth in life can prepare the next generation for an inheritance

Canada’s wealth transfer – in which $1.6-trillion is expected to change hands by 2030, with more anticipated in the years following that – is likely to happen largely after the current wealth owners have died. But if done right, letting the next generation start drawing from their inheritance while their affluent parents are still alive could help address one of the biggest challenges: recipients who are ill-prepared for the large sums of money coming their way.

Why transferring wealth during a lifetime can make sense

Those who intend to pass on 100 per cent of their wealth to their children upon death anticipate their estate will average about $960,000, according to an Ipsos survey conducted last year. It’s a sum that could go a long way in helping the next generation today, prompting more Canadians to ask, “Why wait?” A big motivation for giving while living is the ability to see the money being used to help loved ones buy houses, pay down debt, save for their future or pursue other dreams.

The tax-filing obligations on behalf of a deceased person can be complex and varied

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Filing your taxes every year can be a challenge, but filing a person’s final tax return after their passing can be complicated by myriad tax rules – as well as raw emotions and grief. For clients in this predicament, advisors will often refer accountants who specialize in estates to handle the filing of T1 Income Tax and Benefit returns (called final returns) and T3 Trust Income Tax and Benefit returns, which include the income of the estate. There are also optional T1 returns, which can include income owed at the time of death but not yet received, such as dividends from a public or private company.

Canadians will still have to file U.S. estate tax returns even if Trump extends higher exemption amount

Canadians who die owning U.S. real estate or shares of U.S. corporations worth more than US$60,000 will have to file a U.S. estate tax return even if president-elect Donald Trump’s incoming administration extends legislation that doubled the U.S. estate tax exemption amount. For 2024, that amount for individuals is US$13.61-million, increasing to US$13.99-million in 2025. However, the amount will be effectively halved in 2026 if no legislation is passed before the end of 2025.

How to navigate real estate as part of family wealth transfers

The transfer of real estate is bound to be a significant consideration in Canada as the asset class represents about 55 per cent of overall household wealth. Although advisors don’t deal with Canadians’ real estate investments directly, they’ll play a key role in helping families sort through the reasons and goals for real estate transfers, the timing, and who wants the property and will take care of it.

Home co-ownership can cause estate-planning havoc

As more Canadians buy houses with family members or friends for affordability reasons, a concrete plan is needed in case one of the homeowners on the title passes away. Drafting a co-ownership agreement is the first step, says Christine Van Cauwenberghe, head of financial planning at IG Wealth Management in Winnipeg. “All property owners should understand the intended outcome in the case of a death,” she says.

Feds’ draft legislation eases some concerns around capital dividend accounts, estate planning

Draft legislation released this past summer offers relief to business owners worried about managing their capital dividend accounts (CDAs) this year after changes to the capital gains inclusion rate, and also addresses issues around loss carrybacks in estate planning. The Department of Finance’s proposed new rules clear up a potential problem for private corporations calculating gains for their CDAs.