For some people, financial planning is mainly concerned with how best to go about building a nest egg, and how to make it last through retirement. But for many, there is a desire to ensure their estate delivers benefits beyond their own retirement and produces a legacy even after they have passed.
Why Estate Planning Is Important
If you wish to leave behind a legacy, whether itâs for family and loved ones or a charitable institution, then you need to put a well-thought-out Estate Plan in place, so your legacy is established in accordance with your wishes. Without such a Plan, strangers (the State, Lawyers or individuals that donât have your interests in mind) could determine what happens to your Estate.
If you wish to ensure that you are in control of what happens to your estate, and if you want to guarantee that your estate is handled in accordance with your directives, then having an Estate Plan is paramount.
What We Can Do for You
Our Estate Planning service includes:
- Helping you understand the importance of a will : Your will should be the corner stone of your Estate Plan. We can help you understand why and how you should structure this document so your legal team can create a will that reflects how you want your Estate disposed. From a simple will to a Testamentary Will, or Joint Wills and Living Wills â our experts will help you navigate through the complexities, so you wonât need to stress over whatâs what!
- Choosing Executors : The Executors of your Estate wield strong powers that determine how your Estate is finally dealt with upon your passing. Weâll help you understand the importance of choosing an executor (s) for your Estate, and what criteria you should consider when appointing someone to discharge this all-important role â especially if minor children/guardians are involved.
- Designating beneficiaries : If you donât choose beneficiaries for your assets carefully (or not at all!), your estate assets might well end up in the hands of individuals that you never intended should benefit from them.
- Considerations for dependents needs : A well-thought-out Estate Plan will ensure that all of the needs of your dependents (be they minors, adult children, siblings, persons with special needs or aging parents) are taken care of in accordance with your desires.
- Tax planning considerations (minimizing Estate taxes and reducing probate fees) : Without a well-thought-out Estate Plan, a considerable part of your estate could erode through taxes, fees and other levyâs, even before your designated beneficiaries see a cent!
- Estate Protection Strategies : Though you might no longer be here, many of your assets â like your long-term investments, property, and other tangible assets â will likely need care, protection and management until they are finally disposed off, and the proceeds distributed to your designated beneficiaries. In the absence of an Estate Plan, your assets will likely not receive the type and level of protection those assets require.
- Health and welfare considerations : A comprehensive Estate Plan contains several components, including directives to your Executors and POA-holders about what to do in case your health (mental or physical) deteriorates. In the absence of those components of your Estate Plan, decisions impacting your health and welfare might be made by others (likely medical professionals or state-appointed representatives) whom you do not trust.
- Distributing your assets/legacy : Without a proper Estate planning, your assets might not be distributed in line with your final wishes. And because creating legally binding wills and ensuring the Estate Plan are in sync with the Will is essential to ensure proper distribution of your estate, our professionals can support you in this endeavor.
Without a proper Estate planning, your assets might not be distributed in line with your final wishes. And because creating legally binding wills and ensuring the Estate Plan are in sync with the Will is essential to ensure proper distribution of your estate, our professionals can support you in this endeavor.
Simply put, an estate plan is written documentation of how you want your assets to be owned, managed, and preserved during your lifetime and how you want them dispersed after your death.
Why is it important to have a plan? To ensure a simple, tax-efficient, and organized transfer of your assets to loved ones.
When you start your plan, there’s a lot to think about. You want to live your life to the fullest and ensure that your heirs will get the most out of the assets you’re setting aside for them.
Here are a few of the things you will need to know:
Your Will
The will is a road map for planning your estate and should be updated on an ongoing basis – particularly as your circumstances change throughout your life.
A will is quick and easy to produce and will generally cover the following:
- The distribution of assets within the estate (e.g., investments, real estate, possessions
- Naming beneficiaries of the estate (e.g., immediate, or extended family, institutions, etc.)
- Naming the executor - the individual(s) or organization chosen to administer the estate.
- If you should die without a will (referred to as intestate), the province you reside in will step in to administer your estate using a formula. In this case, you have essentially forfeited your say on how things are divided and who will oversee the process.
What Is Probate?
Probate is the process by which a provincial court confirms the validity of your will. Potentially, it can be quite time consuming, tying up your assets for months or longer.
Probate fees are essentially the taxes that must be paid to the provincial government before your executor can begin to administer your will. The fees vary from province to province and are based on the value of the assets in your estate. In most provinces, the fee structure is tiered. In addition to probate fees, there are fees payable to the executor administration services and fees payable for legal and accounting services. In the end, the cost of probate can be significant.
Reducing Taxes
If you have a will, upon your death it is your executor’s responsibility to file a tax return for you. The government will consider you to have sold all your assets immediately before your death and any capital gains/losses will be crystallized. That may lead to a big tax bill. Depending on your individual needs, there are strategies you can employ within your estate plan to minimize the amount of taxes you have to pay and to avoid probate.
Below are a few key examples:
- Maximize asset roll-overs -transfers to your spouse that defer capital gains liabilities.
- Get advice on setting up a trust to ensure your beneficiaries are well looked after.
- Give gifts of cash or possessions while you are still alive.
- Consider charitable donations to create valuable tax benefits.
- Buy life insurance that is paid out to the beneficiary on a tax-free basis.
- Restructure investments with insurance companies to avoid probate on death.
- It's important to have a strategy in place to preserve the value of your estate for loved ones. Work with your financial advisor to determine what exactly is in your estate, and then devise your plan.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. FINBIZ Investments do not provide any legal or tax related advice.