When Should You Get an Estate Plan?
Updated: Mar 30
There are life events that necessitate creating an estate plan or refreshing the plan you already have. Here are a few of the most common events.
We all know that we need an estate plan. We may even know the four essential documents that should be included in every estate plan:
Power of attorney
Advance care directive
Letter of instruction
But when should you create your estate plan? Should you wait until you’re
retired? Until you have a million dollars in the bank? Until your kids start college?
Well, no. The truth is, the best time to start your estate plan is today.
But we're all human, and sometimes it takes a major life event to prompt us to action.
Here are just a few of the life events that should either encourage you to create an estate plan — or refresh what you already have in place.
While the following life events may be in a specific order, it’s important to note that every life is unique and may or may not follow the order we have listed here.
You turned 18
If you’re a young person with no major assets or dependents, creating an estate plan may seem futile. However, getting an early start is highly beneficial. Anyone above the age of majority (that's 18 in Canada) should have an estate plan to protect themselves and their loved ones.
Once you are the age of majority, your parents can no longer access your medical records without your permission and are no longer your substitute decision makers by default. Having even a simple personal directive or advance care plan can help your parents and loved ones avoid potentially lengthy legal proceedings and enable them to make decisions based on your wishes.
Life gets complicated fast, and having a baseline plan you can add to will keep everything up to date with minimal hassle.
Your relationship status changed
If you’re in a serious relationship, have recently gotten married, or have a common-law partner, now is the best time to start an estate plan or update your existing one.
The Canadian federal government has its own definition of common-law relationships for tax purposes, but each province and territory has different guidelines for provincial or territorial programs. Some of these definitions will even vary depending on the program such as pensions, insurance, and estate law so it’s important to understand how your relationship is viewed where you live when putting together an estate plan.
Married couples do have automatic rights and tax benefits, but that doesn’t replace an estate plan. Dying intestate (the term used to describe dying without a will) means your estate will be distributed based on the laws in your province or territory.
For those who are in a serious relationship that isn’t legally recognized as a common-law relationship, it’s especially important to create an estate plan. Without an estate plan, your partner may not be able to make medical decisions on your behalf if you suffer a medical emergency. If you were to pass away, they could lose access to the home you shared and will not inherit any of your assets.
It’s important to note that depending on where you’re located, marriage can void an existing will so it’s important to create a new will after you’re married.
You welcomed a child into your life
The birth or adoption of a child is one of the most obvious life events to trigger creating an estate plan that will protect them if something were to happen to you. It’s difficult as a parent to imagine yourself not being there, and even harder to imagine your children in the care of someone else.
Appointing a guardian in your will ensures that your children are taken care of by the people you believe will do the best job. You may also want to consider setting up a trust for your children. It’s important to note that step-parents do not automatically become guardians, so if you and your partner want you to be your step children’s guardian if something were to happen to them, you must be legally appointed.
You’re planning to travel
Most of us don’t plan a trip thinking about the worst case scenarios but estate planning is about preparing for the unexpected. If you’re planning to do any sort of traveling, whether it’s within Canada or abroad, it’s crucial to have an estate plan in place. A power of attorney is one of the most important documents to have in place before you leave.
Your attorney (whoever you’ve appointed becomes your “attorney”, even if they’re not a lawyer) can provide support if you run into problems like a lost credit card or bank card. A power of attorney document will allow them to watch for fraud, cancel your credit card or bank card if necessary, and communicate with your financial institution.
If you have dependents, having a will is especially important if you’re planning to travel without them. Without a will, the courts can appoint a guardian and it may not be the person you have in mind.
You purchased a home
Buying a home is a major milestone and a common trigger for creating or updating an estate plan. A home is often your most valuable asset, both financially and sentimentally. It can be difficult to think about a time when you’re no longer living there but without an estate and proper planning, it could end up costing your heirs unnecessary tax and legal fees. While there isn’t inheritance tax in Canada, there is capital gains tax if the home is sold by the inheritor and the value increases since they inherited it.
While it’s important to speak with an estate planning professional when creating an estate plan, if you have someone specific in mind to inherit your home, it’s also important to speak with them. They may decide they’d rather not inherit your home, depending on their own personal situations.
There are a few options when it comes to how you will include your home in your estate plan, such as a will or trust. We recommend speaking with a lawyer or financial advisor who has experience with estate planning.
There’s been a breakdown in family relationships
A survey conducted by sociologist Karl Pillemer revealed that 27% of Americans 18 and older had cut off contact with a family member. If you have strained relationships with your parents or other family members, it’s crucial to have the right legal documents in place so that your chosen family and the people you care about can make important medical decisions on your behalf.
When it comes to the end-of-life aspect of an estate plan for 2SLGBTQ+ folks, it’s important to have people legally appointed who will affirm and respect you. You should never be deadnamed or misgendered—and that includes after you’ve passed away. A funeral, obituary, and gravestone are all part of how you’re remembered and should fully reflect and celebrate the life you lived.
You’re moving to another province, territory, or country
If you’re planning on moving to another province, territory, or country, an estate plan is critical as estate legislation can vary across Canada. For example, in Québec common-law partners are not considered each other’s legal inheritors unless specified. This means if one partner dies without a will, the surviving partner may not inherit any of their partner’s estate.
An estate plan is especially important for 2SLGBTQ+ individuals, couples or families moving to countries that don’t have the same legal protections Canada has for 2SLGBTQ+ individuals and couples. Should you decide to move outside of Canada, it’s important to speak to a lawyer to ensure your partner, spouse or family is taken care of, in case something were to happen to you. This is vital if a country doesn’t legally recognize your marriage or gender.
Don’t forget to update your estate plan
Estate planning isn’t something you can check off your to do list and forget about; updating your estate plan is equally as important as creating it. Life rarely stays the same for long. When you consider how much your life and the world around you changes over the course of your lifetime, it’s inevitable that your estate plan will have to change with you.
Once you’ve updated your documents, don’t forget to update your EstateBox. If you haven’t created your EstateBox account yet, don’t worry! Create your account today and enjoy a 60-day free trial (no credit card or code required) to help you get started on your life and legacy plan.
How is Life and Legacy Planning Different from Estate Planning
While we’re passionate about all things estate planning, we’re not professionals. We recommend speaking with your lawyer or financial advisor when putting together an estate plan. Follow us on LinkedIn, Facebook, and Instagram!