Do I need a tax lawyer to prepare my estate?

The short answer: Yes, estate planners should absolutely be well-versed in tax laws as they relate to your estate. But there are nuances to this, and sometimes calling in more professionals is the best move. Let’s break it down together.

Do estate planners know about Canadian tax laws? 

When working with an estate planner, Aggie, you want someone who knows the ins and outs of Canadian tax laws. A good estate planner should be able to give you a heads-up about potential capital gains tax, probate fees and other tax-related consequences of transferring property. They should also be aware of any recent changes in tax legislation that might affect your decisions.

Here’s the catch: some estate planners are generalists in estate matters. They know a lot about various aspects of estate planning, but they’re not necessarily specialists in any one area. Think of them as the Swiss Army knives of the estate world—they’re versatile, but sometimes, you need a specific tool for a specific job. That’s when a lawyer can help.

When you need a lawyer and/or an accountant

If your estate plan involves particularly complex tax issues, or if you’re dealing with multiple properties, international assets or a complicated family structure (we all have that one uncle, right?), then it’s time to bring in a tax lawyer and possibly a Chartered Professional Accountant (CPA). Each professional will bring a unique set of skills to the table that an estate planner might not be able to advise on.

What lawyers do for estate planning

A tax lawyer can dive deep into the specifics and offer tailored advice that aligns with the current laws. If transferring a secondary property triggers a hefty tax bill, a tax lawyer can explore strategies to minimize what is owed, such as using trusts or gifting strategies. They also ensure your actions are legally sound, reducing the risk of any unpleasant surprises from the Canada Revenue Agency (CRA).

What accountants do for estate planning

A CPA or tax accountant is your go-to expert for financial details. They can provide in-depth analysis and advice on the economic implications of your estate planning decisions. Working with a CPA is crucial, especially when you need precise calculations regarding capital gains, income tax planning and the timing of property transfers. They can also help with tax filings, ensuring that everything is reported correctly and optimizing your overall tax situation.

Why you may need both

Having both a tax lawyer and a CPA involved with your estate planning ensures that your estate plan is both legally strong and financially optimized, giving you a comprehensive approach to estate planning.

Ideally, all three—your estate planner, lawyer and accountant—should work together like a well-oiled machine. Estate planning is a team sport, and having all these professionals on your side ensures that all bases are covered. The estate planner can create a comprehensive plan that aligns with your wishes, while the lawyer and CPA fine-tune the details, ensuring that the plan is both tax-efficient and legally effective.

This collaborative approach can save you time, money and headaches down the road. Plus, it gives you peace of mind knowing that every aspect of your estate is being handled by the right expert.

What should you consider when hiring an estate professional?

So, what’s the takeaway, Aggie? Support is key. Here are three key things to consider when hiring an estate professional:

1. Expertise: Ensure your estate planner has a strong understanding of tax laws relevant to your estate. Ask about their experience with similar estate situations.
2. Complexity: If your future estate involves complicated tax issues, multiple properties or international assets, consider consulting a lawyer and a CPA, in addition to your estate planner.
3. Teamwork: Look for professionals who are willing to collaborate. The best estate plans often involve a team-based approach, with each expert contributing their specialized knowledge.

In the end, Aggie, whether you stick with your estate planner, bring in a tax lawyer or add a CPA to the mix (or both), the goal is the same: to create a plan that protects your assets, honours your wishes and makes life easier for your loved ones. And, if you get to avoid any unpleasant surprises from the taxman? Well, that’s just the cherry on top.

Read more Ask MoneySense columns:

• When working with a financial advisor, understand what fees you’re paying
• How to consolidate your registered accounts for retirement income in Canada
• Update on bare trust tax filing rules for 2024 and beyond
• What happens to an RESP for grandchildren when you die?

About Debbie Stanley, TEP, MTI

Debbie Stanley is an estate and trust professional, and CEO of the estate firm ETP Canada. She is a writer, speaker and regularly featured guest on Zoomer Radio.

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