6 Estate Planning Essentials

Listen to this Podcast

6 Estate Planning Essentials

A recent poll by Angus Reid Institute revealed that 51% of Canadians do not have a will. Many people believe they are too young to need one, or they don’t have enough assets.

A will is the starting point of a good estate plan. It’s never too soon (or too late) to meet with your financial advisor and create an estate plan that’s done right.

1. Make a will. The sad reality is that misfortune could strike anyone at any time, and the consequences for not having a will in place can be significant. If you are in a common-law relationship, for example, your partner could inherit nothing, and relatives or other important people in your life could be overlooked. A will ensures that your assets are distributed according to your wishes. A power of attorney ensures that someone you trust has legal authority to handle your finances if you become incapable of doing so.
2. Choose an executor. The role of executor is an important one and the duties can be complex and time consuming. Be sure to select someone responsible and decisive who is good with numbers and paperwork. While the first impulse may be to choose an executor who is close to you, remember that your nearest and dearest will also be the most devastated by your passing. Consider naming a trusted professional as executor or make provisions to have your executor work with a professional who can provide guidance.
3. Keep it up-to-date. Marriage, name changes, common-law unions, divorce, children, death of a beneficiary or executor — these are just some of the life events that can render your will out of date. It’s a good idea to review it every couple of years to ensure that nothing has changed.
4. Minimize estate taxes. Many people try to avoid probate taxes by incorrectly naming beneficiaries on RRSPs or by jointly owning assets such as houses or bank accounts. These attempts can create unforeseen problems and may actually be more costly. It is essential that you get expert advice on the best way to deal with assets to minimize taxes.
5. Think ahead. Sometimes, the best way to avoid taxes and enjoy your legacy is to give a gift while you are alive. Consider making a gift to mark an occasion such as a special birthday or to help them achieve a milestone such as contributing to education or buying a home. Similarly, a donation to charity gives you both the satisfaction of giving and a tax deduction.
6. Get help. A good advisor will encourage you to think about your estate as part of your overall financial plan. Your advisor will also ensure that everything is properly structured to minimize the tax burden on your estate.

Connect with your advisor to talk about your estate planning management to ensure every aspect of your financial plan is complete.