The essentials of estate planning – rule one: do it now
“In this world, nothing is certain but death and taxes.” The famous American, Benjamin Franklin, wrote those words over 200 years ago and they still ring true today. Most of us tend to avoid thinking about the end of our life and most – if not all – of us certainly do not enjoy paying taxes. But you should think ahead and establish an estate plan now. By clearly stating your wishes for how your legacy should be passed on, you will protect your family and reduce the taxes levied against your estate.
Here are the essentials of an estate plan:
- A Will is the foundation of any estate plan. It designates how your estate – money, property, insurance proceeds and other investments – should be distributed. If you die without a Will (i.e. intestate), provincial legislation will determine how your estate is distributed amongst your heirs.
- A Living Will provides direction for your care in the event of catastrophic illness or disability.
- An Enduring Power of Attorney (also called a Mandate in case of Incapacity in Québec) provides direction for how your property will be managed in the event of incapacity.
- An Executor (sometimes called a Personal Representative or in Québec, a liquidator) is the person named in your Will to settle your estate according to your documented wishes.
- A Guardian should be named in your will for your minor children.
- Liquid Assets are important to pay for taxes, debts, the costs of settling your estate and/or other obligations. If you do not anticipate that your estate will have sufficient liquid assets to pay these amounts, consideration should be given to purchasing insurance.
- A Trust can provide that part or all of your estate be held by a trustee until a beneficiary reaches a certain age. Trusts in your will can also be used to reduce taxes for the beneficiaries.
- Funeral Services can be prearranged to save your estate some money, avoid extra stress on your survivors, and ensure the service is according to your wishes.
- Financial Assets should be comprehensively listed in your records -- your bank accounts, insurance policies, investment accounts, and other financial information --and be sure your Executor and/or survivors know where to find them.
- Special Circumstances -- an estate plan becomes even more essential if you own a business, are divorced or part of a blended family, live in a common-law relationship, have disabled dependants, or are responsible for the care of elderly relatives.
- Revise as Required -- you should revise your estate plan following any major life event such as a marriage or divorce, birth of a child or grandchild, death of a spouse, heir or executor, property purchase or sale, change of residence (to a different province or country), or the onset of a serious illness or liability.
Creating an estate plan now avoids difficulties and costs later. To do it properly, you’ll need an estate lawyer and perhaps an accountant, along with your financial advisor who can ‘quarterback’ your estate planning team and keep everybody on track with your wishes for your legacy.
John Scholl B. Mathematics, CGA,
Consultant - Investors Group Financial Services Inc.
Phone: (905) 450-2891 X529 Toll Free: 1 (866) 799-2223 x529 Cell (416) 731-3660 Fax: (905) 450-9747