Jackie and Jin are back discussing the theme of the “last dance” and reflecting on the passing of Donna Summer, a talented singer. The song acknowledges that confronting our mortality is a universal experience, regardless of fame, and emphasizes the importance of cherishing every moment. Nobody talks about dying, but if it is not prepared well. It could lead to unintended consequences that you don’t feel comfortable about. Have you watched Sunday afternoon tv shows or movies? There is always some who pass away without will and the family go through the drama and end up not speaking to each other! So, talking about estate planning is crucial piece
Why is it important to talk about this with a financial planner? Because we can discuss how you to create the desired outcome for your loved ones. Let’s leave space for talking through what you want to see happen and what your concerns about your estates are and what the next best steps are.
Jackie and Jin delve into the topic of estate planning, noting that while it can be initially daunting, clients often find relief when discussing it. They highlight the importance of having a plan to avoid potential conflicts and disagreements among loved ones after one’s passing. Our busy lives can hinder progress in this area but it is important that we are accessible and have open conversations about estates to prevent animosity among family members. Lastly, they seek to explore the key considerations for estate planning, particularly for business owners and individuals seeking to organize their estate affairs.
What are some things that individuals trying to organize their estate affairs look out for?
Jin highlights the common issue of not having all the necessary estate documents. He mentions the importance of wills, along with two types of power of attorney: one for property and one for personal care. Jackie adds that disputes can arise when end-of-life care and asset distribution are not clearly defined, leading to emotional turmoil and legal battles. Jin emphasizes that estate planning is not just about fulfilling one’s wishes but also taking care of loved ones after passing away. Without guidance, loved ones are burdened with making difficult decisions without knowing if they align with the person’s intentions, emphasizing the importance of comprehensive estate planning.
What are some other things that people need to think about when it comes to their estate?
Jin discuss the importance of making decisions and not delaying estate planning, as every decision (or lack thereof) impacts one’s legacy. They then address the issue of choosing the right individuals for important roles, such as the executor and guardian. Jackie shares a personal example of considering Jin as her executor without discussing it with him, highlighting the importance of communication and informing the chosen individuals about their roles and responsibilities. Remember that the executor has various responsibilities, including dealing with family dynamics, financial matters, and tax liabilities. Jin adds that it’s crucial to consider the availability and longevity of the chosen individuals to fulfill their roles effectively.
Another important consideration in estate planning is the compensation of the executor. The executors are allowed to charge for their services, and the specific percentage may vary. The compensation can be up to 4%, although it’s important to note that the compensation will be subject to legal regulations and may vary depending on the jurisdiction.
Mistakes or issues that individuals should be aware of when contemplating their estate plan.
The common mistake of thinking that estate planning is a one-time task that can be forgotten once completed. They emphasize the importance of regularly reviewing and updating estate documents to align with changes in one’s life circumstances. For instance, if you go through divorce, marriage, having children, and the passing of loved ones, all of these can impact the distribution of assets and beneficiaries.
It is important to ensure that beneficiaries listed on various financial documents, such as pension plans, group RRSP plans, and insurance policies, are up to date and aligned with one’s current wishes.
The importance of considering taxes.
The government continues to seek tax revenue even after a person’s passing, and it’s crucial to plan ahead to minimize the tax burden on assets and ensure that more of one’s wealth can be passed on to their loved ones. Tax efficiency in estate planning is crucial, and people need to understand how different types of assets are taxed. You need to understand how income tax, capital gains tax, and other taxes that may apply to various investments. Overall, they stress the importance of working with a financial advisor to project tax liabilities and explore strategies for minimizing taxes on the estate.
Any final thoughts on estate planning?
We could go on for the entire day talking about issues around estate planning, but one other thing that comes to mind is making sure that you do not give too much money to your children when they are still young. Large windfall during early age could actually lead to long-term unhappiness especially if your heirs are not financially responsible yet. Reach out to our team at email@example.com for our vetted list of lawyers and to start having conversation about your financial future.