The great wealth transfer requires more than a 20-year-old will and naming a few beneficiaries

There are numerous estimates predicting that the

transfer of wealth

from

baby boomers

to the next generations — mainly

millennials

or

gen-Xers

— will be in the range of $1 trillion to $2 trillion in Canada within the next 10 to 20 years. The taxman, of course, is poised to take a significant bite of that wealth.

Given this looming transfer, the

estate planning

business has been thriving. Estate planning involves the planned transfer of wealth in an orderly fashion and requires a multitude of disciplines, including tax, legal, accounting, investment planning, insurance, trust administration and philanthropy.

Many of these professions offer courses on estate planning, but there are few organizations that encompass the multitude of disciplines required to plan and implement a good estate plan. The designation granted by the

Society of Trust and Estate Practitioners

(STEP) is one of them. It offers numerous courses, conferences, articles and other expertise to help practitioners plan their clients’ affairs with the multidisciplinary approach that is a must. STEP’s rigorous training equips practitioners with great tools.

There are no cookie-cutter approaches to estate planning. You might expect that your local accountant, insurance adviser, investment adviser or lawyer will have all the answers. They probably don’t.

I recall reading a full-page newspaper article about estate planning while vacationing more than 25 years ago in Saskatchewan. It was written by a local insurance adviser who espoused a method of estate planning that advocated having “mom and dad” sit down with all their ultimate beneficiaries around the “kitchen table” in a planned meeting facilitated by him where the ultimate estate plan would be laid out. If there were any problems or issues, they would be dealt with right then and there.

I was happy that approach worked for him, but I knew that taking that kind of approach with most of my clients would be a disaster. For Seinfeld fans, it reminded me of

Festivus

, where everyone gathers around a pole at dinner for an “airing of the grievances.”

Estate planning can involve highly-charged emotions that are not usually resolved by simply sitting around a table and having it out or airing one’s grievances. It involves careful coordinated planning with the various disciplines and an appreciation of the complex emotions and psychology that are often at play.

It also involves aggressively keeping up to date since laws and government administrative procedures can quickly change and materially affect an estate plan. For example, you have to consider if another country has jurisdiction over some of your assets that you wish to pass along. Many countries will charge a tax — in some form or fashion — on the transfer of those assets, such as real estate, either during your lifetime or on death.

The most obvious example is the

estate tax in the United States

that applies to its citizens and U.S. domiciles. Americans can take advantage of an exemption, but the amount has been a political football over the years.

For 2025, the amount is US$13.99 million, but it was scheduled to decline to approximately US$7 million at the end of this year. However, President Donald Trump’s

One Big Beautiful Bill Act

has erased that possibility by making the exemption amount US$15 million for 2026 and indexing it to inflation for every year after.

U.S. estate tax rates are progressive, with 40 per cent being the top rate. Any assets in excess of the exemption amount in the year of death will be subject to the top rate on worldwide assets for U.S. citizens, regardless of where their wealth is held.

The U.S. estate tax also applies to non-U.S. persons, including many Canadians, if they hold U.S. assets such as stocks and real estate at death. Can affected Canadians avail themselves of the full exemption amount? No.

However, Canada is one of a handful of countries that the U.S. has agreements with that enable affected persons to use a portion of the exemption amount, with the portion being the ratio of the fair market value of U.S. assets at death compared to the deceased’s fair market value of worldwide assets multiplied by the current year’s exemption amount.

For example, let’s say Mr. Jones, a Canadian who is not a U.S. person, owns US$1 million of Apple Inc. stock at death and a US$2-million home in Florida. His worldwide estate is worth US$20 million when he dies on Feb. 1, 2026. His U.S. assets are US$3 million, or 15 per cent of his estate. Accordingly, he would be entitled to 15 per cent of the 2026 exemption amount of US$15 million, or US$2.25 million.

Overly simplified and ignoring any currency implications, Mr. Jones’ U.S. estate tax liability would be US$300,000 (US$3 million minus US$2.25 times 40 per cent).

The above would be separate and apart from his Canadian tax liabilities arising from deemed dispositions upon death. Would his estate be able to use the U.S. estate tax liability to offset any Canadian tax? Perhaps. But such relief is very limited given the restrictions in the Canada-U.S. taxation treaty.

What does all of this mean? In short, the $1-trillion to $2-trillion wealth transfer is well underway. Developing an effective estate plan requires more than a

will

from 20 years ago, a few beneficiary designations or the advice of a single professional who claims to do estate planning.

It demands a coordinated, multidisciplinary approach — tax, legal, accounting, investment, insurance, trust and philanthropic expertise — working in concert. It demands constant vigilance to keep pace with shifting laws, cross-border complexities and changing family realities.

Estate planning is an ongoing act of stewardship. Done poorly, it’s an expensive gift to the government — to help fund their latest spending spree — and a recipe for family strife.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

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