Do-it-yourself estate planning leaves heirs exposed to potential
financial and legal challenges
TORONTO, Aug. 31, 2015 /CNW/ - CIBC (TSX: CM) (NYSE: CM) -- When it comes to the transfer of assets from
one generation to the next, having a will is the most fundamental
component in your estate plan.
"It's surprising how many people either don't have a will or think they
don't need one," says Jamie Golombek, Managing Director, Tax and Estate
Planning, CIBC. "If you have no will, you have no say in who will
manage the estate, who will inherit your assets or what steps could be
taken to minimize taxes. Without proper planning and a written will,
you are leaving it to the legislation as to who ends up with your
assets and could be exposing your heirs to all sorts of potential
A recent CIBC poll finds that more than half (51 per cent) of Canadians expect to leave assets upon their death. The poll also
finds that Canadians on average plan to leave their heirs nearly $380,000.
Mr. Golombek outlines the common mistakes Canadians make in estate
planning and tips on how to avoid them in his report, "Your Estate Matters", which is the first of a five-part series of reports on estate
planning that are available in CIBC's Advice Centre.
Mistake #1: Misconceptions of what an estate is
While the term "estate" often evokes images of sprawling mansions or
luxurious lakeside cottages, almost every adult has an estate.
"If you have retirement savings or real estate such as a family home,
then you have an estate," Mr. Golombek says. Estate planning is the
process of making arrangements for the management and transfer of your
estate. "An estate plan is always recommended if you have any assets at
all, but it is essential if you plan to take care of any dependents,
such as a spouse, partner or children."
Mistake #2: Letting the government write your will
A written will is at the heart of any estate plan. It records your
intentions for the management and transfer of your assets. One of the
most common mistakes in estate planning is not having a will at all.
The estate is then administered according to provincial law, leaving
crucial aspects to be decided by the government.
"To allow for your estate to be passed on to loved ones according to
your wishes and with minimized delays and costs, you should have an
estate plan and a written will," says Mr. Golombek.
Here's what might happen if you don't have a will:
The surviving spouse or partner might not be entitled to all assets. In
most provinces, after granting a preferential share of the estate to
the spouse, the balance will be split between the spouse and any
The surviving spouse might not be able to obtain ownership of the family
home. If the children's share of the estate exceeds the value of the
real estate, the spouse might be forced to sell and pay out the
Children under the legal age may not have access to their share of the
estate. Their inheritance might have to be paid into court to be
managed by a government office until they reach the age of majority.
The surviving spouse might not automatically be named as the estate
administrator. They would have to apply to the court for this role.
And - most important - the value of the inheritance might be
significantly eroded by taxes. Income taxes can often be deferred by
taking advantage of various spousal or partner rollovers.
Mistake #3: Do-it-yourself planning
When it comes to making arrangements for the management and transfer of
their estate, Canadians should not resort to do-it-yourself planning.
"Many estate planning mistakes are made through inexperience and lack of
knowledge," says Mr. Golombek. "Family, succession and income tax laws
are very complex and vary from province to province. These laws also
"You should obtain professional advice to avoid estate erosion and
complications for the next generation," urges Mr. Golombek. "The cost
of proper advice is often less than the cost of unnecessary taxes and
fees if you don't have an estate plan in place."
Key Poll Findings:
Percentage of Canadians expecting to leave assets to someone upon their
Overall value of assets expected to be passed on:
$50,000 - 99,999
$100,000 - 249,999
$250,000 - 499,999
$500,000 - 999,999
> $ 1,000,000
From May 19 to May 20, 2015, an online survey was conducted among 1,504
randomly selected Canadian adults who are Angus Reid Forum panelists.
The margin of error - which measures sampling variability - is +/- 2.53
per cent, 19 times out of 20. The results have been statistically
weighted according to education, age, gender and region (and in Quebec
language) Census data to ensure a sample representative of the entire
adult population of Canada. Discrepancies in or between totals are due
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SOURCE Canadian Imperial Bank of Commerce
For further information:
Media contact: Caroline Van Hasselt, Director, External Communications, at 416-784-6699 or e-mail: Caroline.VanHasselt@cibc.com