Hindsight is always 20/20. Once major life events happen, we always wish there were things that we knew or did beforehand.

This reminds me of a client I had recently. Melissa was appointed executor for her father’s estate. He was the business owner of an incorporated company, but Melissa didn’t know where her father’s corporate documents were, who his accountant was and which of his assets were personally held vs. corporately held. Worst of all, she didn’t know what type of taxes would be triggered by his passing.

Melissa came to me in a moment of uncertainty and anxiety. She told me: “I thought being an executor just meant signing papers.”

This is a commonly held understanding. I don’t blame or fault Melissa for not knowing the finer details of how her father operated his corporation. Estate planning isn’t just about having the right documents in place. It’s about forward thinking for your successors and the next generation. It’s about having a plan in place so that the passing of a loved one doesn’t result in more stress during an already difficult time.

My advice for business owners is to make arrangements in advance. Financial consultants help you plan your estate and keep the documents organized for executors. We can put the tools in place to mitigate all the nuances involved in wealth transition.

I also have some advice for people who find out they have been named executors: don’t wait until the passing of your loved one to get organized. Encourage your parent or family member to share key contacts and the location of documents with you ahead of time. Better yet, work with a financial consultant to get a plan in place.

When a spouse or a child is left behind, the onus ends up on them to try to figure everything out, often in a state of grief and distress. It’s unfortunate that, more often than not, they’re left unprepared. Executors don’t understand the liability that they’re sitting on. That can mean their equity is eroded, especially if there’s not enough liquidity in the private corporation.

As an Edmonton financial planner, I often remind families that estate planning is critical even if you don’t own a company or corporation. Mai and William are a retired couple in Edmonton. They don’t have a business or a corporation. They had a home that was entirely paid off, RRIFs, TFSAs and some non-registered investments. They told me: “We did our wills 15 years ago. We’re fine.”

On paper, Mai and William were organized. But when we reviewed everything, we found out that beneficiary designations hadn’t been updated. One RRIF listed the estate instead of the spouse. Their daughter had been named as executor, but she had no idea where documents were. There had been no estimate of tax once both her parents had passed.

When we ran projections, the combined tax exposure on the passing of both Mai and William was significant. That’s largely because of fully taxable RRIF balances and capital gains in the non-registered account.

Most people are surprised. They think the government only taxes them on what they withdraw from their RRIFs each year, but that’s not exactly true. On the second death of a married couple, registered accounts are fully taxable unless rolled over to a spouse. That can push the estate into the highest marginal tax bracket in Alberta in one year.

The bigger issue wasn’t taxes. It was the lack of clarity from Mai and William. Their daughter would have been left sorting through accounts, calling multiple institutions, waiting on probate and trying to understand why she had such a large tax bill to shoulder.

Planning Mai and William’s estate didn’t require any drastic changes. We simply updated designations, coordinated their accounts, modeled tax outcomes and modeled different scenarios to help reduce taxes and amplify the estate. This simplified the job of the executor—their daughter—significantly.

I’m pleased that Mai and William reached out to me at the right time, before any major life events or deaths occurred, so that they could prevent their daughter from shouldering this financial stress and burden.

Even straightforward estates can become complicated if they haven’t been reviewed in years.