Grow Together - April 2025

In this issue: Message from the President & CEO | Quality over quantity | The probate puzzle

Message from the President & CEO

Jim Andrews, CA, CPA, MBA
President & CEO

February 3, 2025 officially marked our beginning with National Bank. It brings me back almost five years ago when on March 3, 2020, CWB announced its own acquisition of T.E. Wealth and Leon Frazer & Associates to expand its wealth management presence across the country. Over this time, we have integrated the firms to deliver comprehensive financial planning and a diverse suite of investment management solutions to high-net-worth families across Canada. This continues to be our goal as we turn the page on our next chapter with National Bank.  

National Bank has demonstrated a commitment to excellence and innovation in wealth management, and because of this, they recognize the talent and client-centric focus of our teams. They’ve been deliberate in listening to our advisors, supporting them, and ensuring they have the time and attention needed to understand the opportunities for an enhanced client experience offered by this new and expanded network. They’ve also shown care to our support staff, pairing each employee with a National Bank “Buddy” to help them understand and ease into their new world. 

Just as we’ve always prioritized our clients’ well-being, we’re seeing that same level of care extended to our people. This thoughtful approach allows us to preserve what works well, while making space to elevate the services we provide. Our leadership has always been about driving positive change to create more value for our clients and our people, without creating undue disruption. 

At its core, wealth management is about people: our clients, the advisors who provide expertise to support them, and the staff who ensure our advisors have the tools they need to focus on their clients. We are thoughtfully working with each advisor to ensure the new environment works well for them. Once this is formalized, we will then work on client integration into the National Bank platform. More communications will follow in the coming months and we’re aiming for client migration this fall.  

As we ensure our clients receive important acquisition updates, we continue to operate business as usual and are still deeply committed to guiding them through an everchanging and uncertain world. Author James Clear wrote, “When accessing all information is common, paying attention to important information is rare” and this inspired the current issue of Grow Together. In an era of abundant information, deep focus and critical thinking are rare—and therefore, highly valuable. Our advisors’ ability to pay attention to, and piece together, the right information for each client’s needs is increasingly crucial.  

Inside, Scott Blair, Chief Investment Officer, writes about our investment team’s active management role in accessing and filtering through quality information over the high quantity of information we receive daily. Gary Leung, Senior Planner, draws from his insights as a Trust and Estate Practitioner (TEP) to help understand the complexities of probate—when it makes sense to avoid it and when that may not be in your best interests. 

Through times of change, clear, relevant, and timely guidance is vital to clients so they so can make informed decisions with confidence. I’m excited for what lies ahead, for both our clients and our teams. Alongside National Bank, we have an opportunity to build something special: to bring Canadians more value and to continue earning our clients’ trust every day. 

I look forward to the conversations we’ll have, the progress we’ll make, and the stories we’ll write together in our next chapter. 

Quality over quantity

Scott Blair, CFA
Chief Investment Officer

A colleague and I recently reminisced about what a great decade the ‘90s was—and not just because we were all younger. Back then, the internet complemented our lives—it didn’t dominate them. For the first time, we experienced the convenience of doing many tasks ourselves from the comfort of our homes, such as banking and online shopping. We engaged in new technologies that let us enjoy the benefits of time savings, increased connectivity with others, and access to more information.  

Today, the time-saving aspect of the internet has been superseded by the time spending aspect. According to a report by DataReportal, an online global reference library, in 2024 the average time global internet users spent connected each day was 6 hours and 38 minutes. More than a quarter of the day! This number is likely understated for developed nations like Canada, white-collar workers, and younger cohorts.  

Unsurprisingly, finding information and following news and events were among the top reasons given for usage (Figure 1). This begs the question: an abundance of “free” information is making us better informed, but is it helping us make better decisions?  

Figure 1: Main reasons for using the internet

Source: DataReportal

Our own worst enemy

We like to think that we’re rational most of the time, and that we base decisions on what’s best for us given the information we have at the time. But when it comes to investing, behavioural finance tells a different story. Our rational side constantly competes with our biases and emotions for control over our decisions. So, while having access to virtually limitless information should lead to better decisions, behavioural blind spots pose challenges that investors need to overcome. 

Behavioural blind spots that can affect how we decide

1. Confirmation Bias. We tend to seek out information that supports what we already think and discount information that contradicts our beliefs. For example, when there are always lots of experts forecasting an imminent market correction or crash. Reading a stream of articles, which all predict the same thing, can reinforce its perceived inevitability.
2. Herd Mentality. Following the crowd instead of doing our own analysis or trusting our instincts for fear of missing out (FOMO). Think Cannabis stocks in the later 2010s and the meme stock craze through the pandemic. These stocks were driven by FOMO—not fundamentals. 
3. Hindsight Bias. We often rewrite history in our favour, changing our views to fit with what actually happened. In hindsight, it was obvious that technology stocks were in a bubble at the turn of the century. Many who heavily invested at the time now insist they “knew it all along”.
4. Recency Bias. Putting more weight on recent experiences rather than facts. Many investors tend to feel the market is “safe” after strong returns and “risky” after a big sell down. The belief is that what has happened recently will continue, whether that’s based on analysis or not.
5. Loss Aversion. We feel the pain of losses more than we feel the joy of gains, so we try harder to avoid the former. When markets are declining, some investors seek to lock in losses being unable to withstand the pain, even though drawdowns are a great opportunity for long-term investors. 

Cutting through the noise

The combination of endless news flow with social media projecting false realities, as well as overcoming challenging behavioural biases, can make it hard to focus on what truly matters. Both professional and individual investors have a role to play here.

For professional money managers, having access to—and focusing on—the right information makes all the difference. A well-defined, research-based process informed by quality data and information from the “horse’s mouth” (like annual reports and conversations with a company’s management team) should be complemented with other trusted sources, such as industry analysts (not Reddit chat boards).  

It also involves looking beneath the headlines to see what’s being priced into a security or the market, doing scenario analysis and taking advantage of opportunities that present themselves. For instance, the tariff war has undoubtedly caused some companies to sell off to unrealistically low prices. By digging deeper and not following the herd mentality, investors can unearth some outstanding opportunities that others are missing. Professional investors often work in a team environment that can stress test ideas by challenging each other’s perspectives. 

For individual investors, it begins with knowledge. Understanding what drives markets, as well as the risks in different asset classes and how they perform over time, is a great place to start. Investors should also have a plan that considers their goals and risk tolerance, to create the right portfolio for long-term success. Once created, investors can run into trouble when they deviate from their plan. The tendency to become confident when markets are doing well, and cautious when they’re doing poorly, can be the cause of this. In other words, they buy high and sell low—the opposite of what they should do! 

Successful investing isn’t about reacting to every headline or chasing the latest trend. It’s about filtering through noise, challenging our own biases, and staying committed to a well-researched strategy. The internet has given us unprecedented access to information. But in a world overflowing with data, the real advantage belongs to those who recognize—and focus on—quality over quantity. 

The probate puzzle – piecing together different strategies

Gary Leung, CFP^®, PFP^®, TEP

Senior Planner

Many affluent families assume that probate should be avoided at all costs, fearing delays, fees, and public scrutiny. However, taking this overly simplistic approach could compromise tax efficiency, legal clarity and family harmony. Like any puzzle, a well-designed estate plan requires fitting the right pieces together. As a Certified Financial Planner^® and Trust and Estate Practitioner, I work with clients to establish a bespoke, comprehensive financial plan, which includes discussing legacy and estate planning strategies for you to consider.     

To understand how each piece fits, I look at a client’s full estate picture, not just part of it - which brings us to this article. I caveat this by saying: Yes, this is long. However, that’s by design. Estate planning, especially probate, isn’t just about creating a Will, choosing your executor, and simply deciding how to distribute your assets. As you’ll see in this article, this is just the tip of the iceberg. 

We live in a world overloaded with advice, information, and people hoping to grasp it all in a soundbite; however, much of it lacks depth, context and an understanding of implications. What works well for one family could lead to unintended consequences for another. We’ve taken the time to unpack as much as we can, so you can move past surface-level advice and begin to understand what will matter to your specific estate planning situation.  

What is probate, who does it help, and when is it needed? 

Probate is the legal process prior to administering an estate in accordance with the deceased’s wishes. It ensures the Will is valid, most recent and formally authorizes the appointed personal representative (also known as the ‘executor’ or ‘liquidator’ depending on province) to handle the estate. Probate also protects the personal representative and beneficiaries from any potential legal disputes over issues like Will validity, unclear instructions, executor actions, inheritance disagreements and creditor claims. It also guards financial institutions against fraud and ensures beneficiaries get their rightful inheritance.

The requirement of probate depends on the nature of the deceased’s assets at the date of death. Probate is typically required when assets are owned solely by the deceased. Assets such as bank accounts, cash accounts, and real estate that are registered and owned in the sole name of the deceased typically require probate. Registered accounts with a beneficiary or successor can bypass probate and pass directly to heirs. For registered plans, if the estate is named as the beneficiary, probate is required.

Time and money

Probate can take several months or longer, especially if the Will is contested, freezing the deceased's assets until official authorization is given. Costs also vary by province or territory (see Figures 2 & 3), so it's worth considering when making retirement plans. Probate fees are calculated based on the gross value of the estate, without accounting for taxes or liabilities. 

Figure 2: Probate fees (estates exceeding $50,000)

Source: 2025 CWB Wealth Planning Guide

• Exposing your asset to creditors if the joint owner faces financial issues.
• Potential division of property if the joint owner experiences a relationship breakdown.
• Family disputes over equalization of inheritance, especially if the joint owner was added out of convenience rather than true legal and beneficial ownership.

Example: A husband and wife, both 65, currently own their home valued at $700,000 in Ontario. Concerned about probate fees and wanting to simplify the future transfer of the property, they add their adult child to the property title as joint tenants with right of survivorship (JTWROS). There are no tax consequences at the time of change, as it is their principal residence. After adding the adult child, the parents together own two-thirds of the property, and the adult child owns one-third. Fast forward 20 years: the parents are now 85 and must sell their home due to declining mobility and health concerns and plan to move to a seniors’ residence. Over the past two decades, the value of their home has increased in value from $700,000 to $1,300,000 – representing a total gain of $600,000. 

The parents' total two-thirds share of the home continues to qualify for the principal residence exemption, meaning their portion of the gain is exempt from capital gains tax. The adult child’s one-third share does not qualify as their principal residence (unless the child actually lived there and claimed it, which is often not the case).

Therefore, one-third of the  total $600,000 gain on the home becomes taxable for the adult child. Using a 50 per cent inclusion rate, $100,000 becomes taxable as a capital gain at the time of sale of the home. 

Outcome: While adding an adult child to the title of principal residence may seem like an easy way to avoid probate, it can create significant and unnecessary tax implications. The amount of unnecessary taxes resulting for the added owner far exceeds any perceived benefit compared to leaving the property in joint ownership between the parents and allowing it to be subject to probate. For example, probate fees for a home in Nova Scotia with a market value of $1,300,000, results in probate fees of $21,343. 

¹ In Quebec, the concept of Joint Tenancy with Right of Survivorship (JTWROS) is not recognized. Real estate and financial accounts held jointly do not automatically transfer to the surviving owner. Instead, they are considered held in undivided co-ownership, and the deceased’s share forms part of the estate.

Likewise, Quebec generally does not permit direct successor or beneficiary designations for registered plans (RRSPs, TFSAs, etc.) through financial institutions as is common in other provinces. These designations must be made in a valid Will that complies with Quebec’s Civil Code.

For effective estate planning in Quebec, it is critical to ensure your Will clearly outlines how these assets should be distributed.

How about other real estate, such as recreational property or the family cottage?   

While maintaining certain property in the family legacy may have sentimental value for you, the first step should be having an open discussion with all family members about their interest in continued ownership after your passing. Figure out who wants the property (also who you’d like to have the property), ensure everyone understands the implications, and document your intentions with the property, as this can reduce any potential for future disputes if there is an unequal estate distribution. It is better to have these discussions during your lifetime, as this will allow you to better plan your estate distribution. Capital gains tax implications will be triggered upon any changes in title for the portion that is changing ownership, and any new joint owners will have future capital gains tax obligations.

Should I add my spouse or adult children to my non-registered accounts or bank accounts as a joint owner with right of survivorship?

Often, people add a joint account owner for convenience, to help manage accounts during their lifetime and to avoid probate. Others establish joint accounts with the intention of gifting the account to the joint owner upon their passing. However, there are a few considerations before doing so:      

Adding spouse: Adding a spouse as a joint owner to bank accounts and investments, such as non-registered or margin accounts, will allow the surviving spouse to continue with the original adjusted cost base (ACB) and bypass probate. No tax implications are triggered when adding a spouse to a non-registered investment. However, income attribution rules will continue to apply, ensuring that income and capital gains from investments cannot be shifted or split with a lower-income spouse. The primary account holder would still be responsible for taxes. 

Adding adult children: Adding a joint owner (other than a spouse) to a non-registered investment will trigger capital gains tax implications to you on the portion where legal ownership is changed. The portion of the account undergoing legal ownership change will be considered a deemed disposition, and capital gains tax will be triggered immediately. For example, the market value of your non-registered account is $800,000 with an ACB of $500,000. Adding one additional owner will result in a deemed disposition of $400,000, with $150,000 in capital gains tax implications. The fair market value (FMV) of $400,000, in this example, will become the new owners' ACB going forward. 

When adding adult children to bank accounts or non-registered investments, careful consideration should be taken. The joint owner will now have full access to your accounts. It is important to document the intention of the joint ownership of the account, especially if the parent intends to leave the account as a gift to the adult child for their future exclusive benefit. 

If not documented, there is potential for disputes over inheritance equalizations. The joint owner could be considered to have been added out of convenience rather than true legal and beneficial ownership. For instance, if an elderly parent was to add an adult child to their bank or investments accounts out of convenience, when the parent passes, the joint owner may not be able to prove both legal and beneficial ownership of the accounts. In such cases, the joint ownership structure could be construed as a resulting trust held by the survivor and intended to be part of the overall estate distribution according to the Will. If the true intentions are not documented properly, this could lead to litigation amongst siblings or other beneficiaries of the estate who believe the account should be a part of the overall estate.

What is the difference between successor or beneficiary designations on my registered plans? Should I designate these accounts to my estate?

Successor designations: Appointing your spouse as successor on accounts such as RRSPs, LIRAs, defined contribution plans, RIFs and LIFs will allow your surviving spouse to continue the account in their name on a tax-deferred basis for the duration of their lifetime. The market value of these accounts will be included in income tax reporting upon the eventual passing of the surviving spouse. 

Appointing your spouse as a successor on the TFSAs allows the surviving spouse to continue to own the account as a TFSA beyond your lifetime without affecting their own contribution limits. If you are the surviving spouse, you can essentially have two TFSAs.

Successor designations on the registered plans will allow the assets to bypass the need for probate.

Beneficiary designations: Naming beneficiary designations on your registered accounts and TFSA is quite common, as it allows the account to bypass probate and to pass directly to the beneficiary. In this case, the accounts are not governed by the Will and do not form part of the estate. 

Although these designations may seem effective and easy to use, there are a few points to consider. 

• Tax implications: Upon the surviving spouse's passing, the market value of accounts such as RRSP/RRIF/LIRA/LIF is included as income on the final tax return of the deceased. If a beneficiary is appointed, they will receive the full market value of the account. While the income tax liability will be attributed to the estate. This may result in unintended unequal distribution to your beneficiaries when attempting to avoid probate, which is illustrated in an example below. 
• Review beneficiary designations: Naming beneficiary designations with your financial institution may seem easy to do, but it is crucial to ensure your designations align with what is outlined in the Will. Discrepancies between the two could lead to disputes and litigation. In complex cases, it may be more effective to designate the estate as the beneficiary and outline the distribution wishes in your Will.

Figure 4: Estate equalization differences 

Do I need any specific documents to deal with property that is owned in another province or country?

Having multiple Wills, including foreign Wills, can be an effective strategy for managing properties owned outside of your jurisdiction. A separate Will specifically for real estate owned in another province or country will ensure the property is addressed according to local estate laws. But be careful – a typical Will includes a clause revoking previous Wills. You'll need legal professionals in each jurisdiction to make sure your Wills don't accidentally cancel each other out, and that they both align with your estate-planning goals.

In today’s world of financial noise and information overload – whether through blogs, forums, friends-of-friends, and well-meaning articles – it’s easy to latch onto one piece of the puzzle without accounting for the other various pieces and understanding the complete, bigger picture. Probate isn’t something to fear, nor is it something to avoid blindly. It’s simply a piece of a much larger puzzle that when viewed in isolation, can have unintended consequences.

We touched on some commonly asked questions in this article, but as we said at the beginning, this is only the tip of the iceberg. When you look at your own estate planning strategy, there may be much more to consider (for example, we haven’t even talked about blended families yet!). If this article triggered any questions you might have, or you’d like reassurance on your estate plan, please reach out to your Private Wealth Advisor – we’re here to help.