By Raymond M. Loucks, CPA, CA, TEP, FEA
Founder, Tranquility Tax Solutions
Published: May 2026
A significant contradiction exists in Canadian estate planning: while many Canadians acknowledge the importance of estate planning, a large number have still not taken the basic steps needed to protect their families, coordinate their affairs, and reduce unnecessary tax and legal complications. Recent studies suggest that although estate planning is widely seen as important, many families have not had meaningful conversations with their advisors about wills, incapacity planning, beneficiary designations, or the transfer of wealth to the next generation.
In British Columbia, that gap matters. A failure to plan does not simply create administrative inconvenience. It can alter who receives an estate, increase probate costs, trigger significant tax liabilities, and expose families to avoidable conflict at the very moment they are least prepared to deal with it.
Common Estate Planning Failures
The most fundamental planning failure is the absence of a valid will. When a person dies intestate in British Columbia, the estate is distributed according to the formulas set out in the Wills, Estates and Succession Act (“WESA”) rather than according to the deceased’s actual wishes. In many cases, that produces outcomes the family neither expected nor intended.
For example, under WESA, a surviving spouse is generally entitled to a preferential share of the estate before the residue is divided: $300,000 if all of the deceased’s children are also children of the surviving spouse, or $150,000 if one or more children are not children of the surviving spouse. In blended-family situations, this can create significant tension. Stepchildren do not automatically inherit from a stepparent unless they have been legally adopted or are specifically included in the estate plan.
At the same time, BC law has become more flexible in recognizing what can count as a will. Section 58 of WESA gives the court curative authority to give effect to a record or document that does not meet the usual formal requirements if it represents the deceased’s deliberate and final testamentary intentions. British Columbia also permits electronic wills and electronic signing, with witnessing that may occur through electronic presence in real time if statutory conditions are met.
A common error is attempting to avoid probate fees by adding an adult child as a joint owner on a bank account or on title to real estate. Although this is often intended as a simple probate-saving step, the legal result may be far less straightforward.
Under the Supreme Court of Canada’s decision in Pecore v. Pecore, a gratuitous transfer from a parent to an adult child is generally presumed to be held in resulting trust for the parent’s estate unless the evidence shows that a gift was actually intended. In practical terms, that means the surviving child may not automatically become beneficial owner of the asset simply because his or her name appears on the account or title.
Unless the parent’s intention to gift the right of survivorship is clearly documented, the arrangement can lead to litigation between siblings, confusion about beneficial ownership, and unintended tax consequences. Joint ownership can also expose the property to the child’s creditors or family-law claims. What is presented as a shortcut often becomes the beginning of a dispute.
3. Ignoring the Tax Bill: Deemed Disposition
Many Canadians underestimate the tax liability that can arise at death. Under subsection 70(5) of the Income Tax Act, a deceased taxpayer is generally deemed to have disposed of capital property immediately before death at fair market value, even though no actual sale takes place. This can trigger capital gains tax on investment portfolios, cottages, rental properties, and other appreciated assets.
Where property passes to a qualifying spouse or to a qualifying spousal trust, subsection 70(6) may allow a tax-deferred rollover. However, that rollover is a deferral mechanism, not an elimination of tax. If no planning has been done for the eventual liability, heirs may be forced to sell assets simply to fund the terminal return and satisfy the Canada Revenue Agency.
4. The Double Taxation Risk for Business Owners
For owners of private corporations, the cost of inaction can be even higher. In many cases, death can create two layers of tax: first, capital gains tax on the deemed disposition of the shares, and second, dividend tax when cash is later extracted from the corporation by the estate.
This is the same economic problem addressed in post-mortem pipeline planning. Where implemented properly, a pipeline transaction can help mitigate double taxation by allowing value to be extracted through repayment of a promissory note rather than through a taxable dividend. As with other advanced planning strategies, however, the effectiveness of a pipeline depends on timing, documentation, and coordination among legal, tax, and estate administration advisors.
5. Outdated Beneficiary Designations
A will may be carefully drafted and still fail to achieve the intended result if registered accounts and insurance policies have outdated beneficiary designations. RRSPs, RRIFs, TFSAs, and life insurance policies often pass outside the estate. An old designation naming an ex-spouse, a deceased relative, or the wrong child can undermine an otherwise well-designed plan.
This issue often arises after marriage, separation, divorce, remarriage, or the birth of children and grandchildren. Proper planning requires coordination between the will, account designations, trust arrangements, and the family’s broader intentions. Estate planning documents should work together; they should not point in different directions.
In British Columbia, estate planning must also address what happens during life if a person loses capacity. Without an enduring power of attorney for financial and legal matters, and a representation agreement for personal and health care decisions, families may be left with few practical options when urgent decisions need to be made.
In those circumstances, a committeeship application may be required to obtain legal authority over the incapable adult’s affairs. That process can be time-consuming, expensive, and emotionally difficult for a family already dealing with a health crisis. A properly prepared incapacity plan can avoid much of that disruption.
The estate planning gap represents more than a missed administrative task. It is a potential transfer of wealth away from the family and toward probate fees, legal disputes, tax inefficiencies, and preventable delays.
In British Columbia, probate fees are nil on the first $25,000 of estate value, 0.6% on the next $25,000, and approximately 1.4% on value over $50,000, with a court filing fee also applying in many cases. Families sometimes focus only on those percentages. In reality, the larger cost often lies in poor structuring, inconsistent documents, tax exposure, and disputes over ownership or intention.
BC probate procedure also contains timing requirements that can catch families by surprise. Notice of a probate application in Form P1 must generally be delivered to beneficiaries named in the will and to intestate heirs at least 21 days before the probate application is filed, which means delay is built into the process even where matters proceed smoothly. Errors in identifying recipients, delivering notice, or preparing the application can extend the timeline further.
A practical starting point is ensuring that the core legal, tax, and procedural components of the estate plan are in place and coordinated.
- A current will. It should reflect present wishes, family structure, and the intended executors and beneficiaries. In BC, this review should also consider whether the will has been executed properly, whether curative issues may exist, and whether electronic execution rules are relevant.
- Tax sensitivity. Families should understand the impact of subsection 70(5), the availability of the spousal rollover under subsection 70(6), and the possibility of double taxation where private company shares are involved.
- Clarifying joint ownership intentions. Where joint accounts or jointly held property exist with adult children, the parent’s intention should be documented clearly to reduce the risk of future litigation under the presumption of resulting trust.
- Incapacity documents. An enduring power of attorney and representation agreement should be in place before they are needed.
- Procedural readiness. Executors should understand the probate threshold, the fee structure, and BC’s notice requirements so that administration can proceed more efficiently when the time comes.
The estate planning gap is real, but it can be closed with a few thoughtful steps taken now. With the right professional guidance, an estate plan becomes more than a set of wishes—it becomes a clear, legally sound, tax-conscious strategy designed to protect your family when they need it most.
This article is for general information only and does not constitute legal or tax advice. Every family and estate is different. Professional advice should be obtained before implementing any planning strategy.