Estate planning is a crucial and responsible step toward ensuring the seamless transfer of assets and the well-being of your loved ones after your passing. While the importance of estate planning is indisputable, its costs can sometimes deter individuals from taking proactive measures to safeguard their legacy. Therefore, it is important for Albertans to have an understanding of various strategic measures they can implement to make the process not only effective but also cost-efficient.

This blog will explore various financial strategies and legal considerations to optimize the estate planning process while keeping costs in check. From leveraging available resources to employing savvy financial planning techniques, this blog will provide insight into the considerations individuals should consider during estate planning to ensure that their family and loved ones will be cared for in the future. 

Understanding Estate Costs

Whether you are new to the estate planning process or are looking to update an existing plan, understanding what your estate will comprise or what it might lose is an important piece of the estate planning puzzle. While most people understand that their assets, including personal property, real property, money, investments, motor vehicles and recreational vehicles, will form the majority of their estate, they are not always aware of the costs their estate might endure before the residue is distributed to their loved ones in accordance with their will. 

Aside from the upfront costs incurred by an individual in the estate planning process, such as legal fees and professional tax advice, additional costs accrued during estate planning and administration through probate can quickly add up. However, working with an estate planning lawyer will allow you to explore various cost-saving strategies to not only reduce your planning costs but also to mitigate the expenses that your estate will incur after your death.

Common Estate Costs in Alberta

In Alberta, various fees and costs can impact an estate’s worth during distribution. Some of the most common estate costs are explained in additional detail below:

Probate Fees

When an estate is administered through probate, it is subject to probate fees. Every province sets their probate fee schedule, and in Alberta, these fees are calculated as a certain percentage of the estate’s total value. Additional administration fees may apply, and all fees must be paid to the court before issuing a Grant of Probate or Grant of Administration. 

Executor’s Compensation

The executor (also referred to as the personal representative or estate administrator) is also generally entitled to receive compensation for their time and expenses incurred throughout the administration and settlement of the estate. The executor’s compensation is usually set out in the will. However, a compensation amount may also be agreed upon between the executor and the estate’s beneficiaries, or the probate court may order an amount.

Tax Consequences

Depending on the assets in the estate, various taxes may also apply. Some taxes might be payable concerning capital gains resulting from the sale of estate assets. Other estate assets may have deferred taxes, which become payable if the estate is liquidated through probate, such as registered retirement savings accounts. 

Maximizing the Value of Your Estate

After all these fees, costs, and taxes have been paid, the estate’s value can decrease significantly before final distribution. Therefore, individuals must know the potential costs and taxes that may apply to their estate. While many of these estate costs are unavoidable, different estate planning strategies can help reduce the amount of these costs, such as:

Preparing a Valid Will and Comprehensive Estate Plan

In Alberta, if you pass away without a will (also known as dying intestate), the default provisions of the Estate Administration Act and Wills and Succession Act. Alternatively, if you have prepared a will that does not comply with the legislative requirements and other formalities or is otherwise deemed invalid, costs may be incurred by the estate’s heirs litigating the estate and distribution of assets in probate court. 

By proactively preparing a valid will and utilizing other estate planning tools and documents, with the help of an estate planning lawyer, you can ensure that your estate will be managed and distributed according to your wishes rather than subject to the general distribution scheme set out under provincial legislation. A valid will also reduces the likelihood of otherwise costly estate litigation between the estate, beneficiaries, and other individuals.

Strategic Tax Planning

While you may possess significant assets during your lifetime, depending on the legal ownership of such assets and what happens with them after your passing, they may be subject to various tax implications, such as capital gains and deferred taxes. Speaking with an estate planning lawyer lets you determine the best tax planning strategy that fits your needs. For example, making a charitable donation from your estate can reduce the estate’s value, reducing the amount of probate fees that become payable. 

It is also important to include particular provisions in your will that provide your executor the flexibility they need to ensure that these strategies effectively reduce estate costs. 

Prepare for the Unexpected

For many, thinking of the future and life after they pass is an overwhelming subject. However, things can happen fast, and it is important to take advantage of your current capacity and decision-making ability and implement a plan. Unfortunately, it is common for individuals to put off estate planning for so long that something happens before they can execute their will or make decisions independently. In other cases, estate planning can be rushed by clients who have avoided the matter for so long but suddenly need things done in a rush before surgery or after a life-changing diagnosis. When an estate plan needs to be prepared in a hurry, legal fees may be charged at a premium to meet a tight deadline, and there may be fees charged by other institutions that hold particular documents and information necessary to facilitate the estate planning. 

As such, it is important to implement a plan as soon as possible to reduce high legal and rush fees. Not only will planning reduce costs, but it also reduces the chances of a mistake in your planning documents. It also allows you time to consider all your options and document your final wishes carefully. 

Contact the Wills and Estate Lawyers at Getz Collins and Associates for Comprehensive Estate Planning Guidance

At Getz Collins and Associates, our team of trusted will and estate planning lawyers appreciate that estate planningis not the easiest topic. However, we also understand that proactive preparation is the best way to keep costs low during the estate planning process and administration. For these reasons, we encourage clients to plan and consider the options available to mitigate the risk of future legal disputes between loved ones. We provide each client with empathetic and trustworthy advice in various wills, estates, and trust matters to ensure their needs are met. 

With offices in Calgary and Strathmore, Getz Collins and Associates proudly serves clients across Alberta. To schedule a confidential consultation with a member of our team to discuss your estate plan, please contact us at 587-391-5600 or reach out to us online.