If you don’t plan carefully, your estate can be taxed away. There can be many tax liabilities triggered by your passing, and solutions should be arranged in advance. As challenging as discussions around estate plans may be, having them can help ensure your objectives, assets and beneficiaries are taken care of. Estate planning helps ensure your wishes are carried out and is an effective way to benefit your heirs. When you’re creating an estate plan, you need to think about the future as it relates to your assets. An up-to-date estate plan can help reduce estate taxes and expenses, simplify the transition of assets, and ensure your loved ones are secure in their financial future after you’re gone. Estate plans can help protect your family from having to make difficult choices about your estate when they are grieving. An estate plan goes beyond just a will, because it considers various other aspects, like appointing executors, guardians for minor children, creating a power of attorney, and more.
What is Estate Planning?
Estate planning focuses on the payment of expenses and obligations at death and the transfer of assets to successors under the Will and outside the Will. The financial planner assesses the client’s estate wishes, projects the client’s net worth at death, determines any constraints or opportunities to achieve the client’s transition and estate planning goals, and develops strategies and recommendations to help meet them.
The financial planner must understand the client’s legal situation. This may relate to spousal and child support obligations or entitlements; third-party obligations; shareholder, partner or trust agreements; Powers of Attorney or Mandates in the case of incapacity. A full knowledge of the client’s legal rights and obligations is critical based on their potential repercussions and impact on achieving his personal goals.
Even for smaller estates, the costs and delays of probate can have devastating consequences. The goal of estate planning is to arrange your financial affairs in a way so that your assets can be passed to your heirs as quickly and as completely as possible.
Do You Need a Lawyer to Make a Will in Canada?
While you may think that you’ve covered all your bases, it is a clever idea to consult with a professional on your estate plan. And if it’s been a while, you may want to revisit your plan. Accounting for all your assets and wishes will ensure your plan is executed smoothly after your death. Keeping written lists and informing your executor will make sure no assets or wishes would get left out. By designating beneficiaries on retirement accounts and completing the transfer on death designations on other accounts, you can keep those assets from passing under the will. Procrastination is the biggest enemy of estate planning. While none of us likes to think about dying, improper or no planning can lead to family disputes, assets getting into the wrong hands, long court litigation, and excess money paid in estate taxes.
Getting a Professional Will Drafted
Everyone over age 18 should have a will as it can prevent havoc among your heirs. A will can also name a guardian for your minor children and designate who should care for your pets. You can leave assets to charitable organizations through your will, too. Wills are inexpensive estate planning documents to draft; many attorneys can help you draft a will for less than $1,000, depending on the complexity of your assets and your geographic location. You can also write your own will with the assistance of online services or other software packages.
Select a Responsible Estate Executor
Your estate administrator or executor will oversee administering your will when you die. It is important that you select an individual who is responsible and in a good mental state to make decisions. Don’t immediately assume that your spouse is the best choice. Think about how emotions related to your death will affect this person’s decision-making ability. If you foresee an issue, consider other qualified individuals.
Simplify Your Finances for Loved Ones
If you’ve changed jobs over the years, it’s quite likely that you have several different retirement plans open with past employers or maybe even several different personal investment accounts. Consolidating accounts allows for better investment choices, lower costs, a larger selection of investments, less paperwork, and easier management. Accounts and policies that have designated beneficiaries will pass directly to those people or entities upon your death. It does not matter how you direct that these accounts or policies be distributed in your will or trust. The beneficiary designations associated with the retirement account will take precedence. This is especially important if you have divorced and remarried.
Update Insurance & Funeral Arrangements
Assets bequeathed in a will often go through probate, as do assets if someone dies intestate. This process, in which your assets are distributed per court instruction, can be costly and time-consuming. As with retirement accounts, life insurance and annuities will pass directly to beneficiaries. It is important to contact all life insurance companies where you maintain policies to ensure that your beneficiaries are up-to-date and listed correctly. Though not necessary, it can still be helpful to add information about your final arrangements. This can include details about your funeral and even your final resting place. This can give great comfort to your loved ones knowing that you were buried according to your stated desires and preferences.
Power of Attorney and Living Will
At a minimum, you should create a will, power of attorney, healthcare proxy, and living will. Your will should also assign guardianship for your minor children as well as any pets. Consider setting up both financial and medical powers of attorney so that people you trust will be there handling your affairs should something happen to you. You can also write a letter of instruction to leave step-by-step instructions as well as spell out your personal wishes for things like your funeral or what to do with your digital assets like social media accounts. If you’re married, each spouse should create a separate will, with plans for the surviving spouse. Finally, make sure that all the concerned individuals have copies of these documents.
Why is Estate Planning Important?
With a plan in place, you can decide the fate of your assets and help ensure your wishes are carried out. Whether the scope pertains to investment planning, initiating CPP and OAS payments, selecting the sequence of account withdrawals during retirement as you gradually utilize your savings, contemplating incorporation, or navigating any other decision influenced by tax considerations, I am here to provide comprehensive guidance.
Mutual trust forms the cornerstone of any successful relationship. This trust is fostered by the conviction that our collaboration is a genuine partnership. My guidance rests upon the latest insights into investment trends, tax implications, and estate planning principles. I commit the necessary time to familiarize myself with you and your circumstances, aiding you in devising a pragmatic financial plan and a step-by-step route to your objectives. My primary aim is to set you on a path toward an improved financial future, spanning both immediate and extended timeframes.
What is a Will?
A valid will is the cornerstone of any estate plan. A will is a legal document that takes effect when you die. It explains your wishes about how your property and possessions should be taken care of and distributed, for example, how much money should be paid to a specific person or charity. A will can also appoint one or more persons to have decision-making responsibility (custody) for children who are not yet adults. You can consider making a will if you are at least 18 years old and are mentally capable, which means you understand what property you have and what you are doing by making a will. Here are some of the most important things to consider:
- Accountants
- Artwork
- Assets
- Bank Accounts
- Beneficiaries
- Bills
- Birth Certificates
- Businesses
- Children
- Charities
- Credit Cards
- Divorce Decrees
- Executors
- Financial Advisors
- Funeral Arrangements
- Heirlooms
- Investments
- Jewelry
- Lawyer
- Life Insurance
- Marriage Certificates
- Mortgages
- Pensions
- Pets
- Power of Attorney
- Probate
- Real Estate
- Safety Deposit Boxes
- Separation agreements
- Social Media
- Subscriptions
- Taxes
- Trust Documents
- Vehicles
- Wishes
Conclusion
At the very least, everyone should have a simple will, which for the amount of distress and costs it can prevent, is very inexpensive. Larger estates may require additional layers of estate planning tools, such as trusts. Still the more preparation done in advance, the easier and less expensive the process will be. Estate planning is the art of developing a strategy to ensure your wealth is directed where you want it in the most tax-efficient manner possible. Often, the notion of estate planning is focused on what your family will inherit after you pass, but that doesn’t have to be the case. A properly drawn Estate Planning strategy dovetails as a part of your retirement plan. It can focus not just on the transfer of money and real property to the next generation, and beyond, but can also include the funding of charitable causes that are important to you.
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