Estate Planning

Making a difficult time, easier

Many people don't understand the significance of having a proper Estate Plan in place. An Estate Plan is an essential part of your Financial Plan because it will ensure your wealth is properly distributed to your family and other beneficiaries when you die.

1. Maintain the State of Your Estate
   
   For financial planning purposes, your estate isn't a mansion or a huge tract of land. Rather, it's everything you own, plus anything that will be received after your death - such as proceeds from a life insurance policy, or pension payments that continue after you die.
   
   If you don't make provisions for the disbursement of your wealth, it could end up in the wrong hands. You need a strategy for transferring personal and business wealth from investments and other assets as quickly and tax efficiently as you can.
   
   
2. Marital Rollover and Joint Accounts
   
   Spouses have many options to organize their affairs to avoid taxes and probate fees. Other techniques also need to be explored to be adequately prepared for the death of the second spouse.
   
   
3. Trusts
   
   Like estate planning in general, trusts have been viewed as being appropriate only for the wealthy. This is untrue. Trusts have become useful for the management and transfer of assets in many different circumstances.

Here are the basic elements of an Estate Plan.

A Will: A properly drafted Will ensures that your wealth is distributed according to your wishes. Without formal instruction, provincial legislation will determine how your assets are divided - which could have little to do with your wishes.

Tax plan: You can reduce taxation of your assets by structuring them properly while you're alive. In Canada, your estate won't face death taxes as it would in some countries. But for income tax purposes some of your assets may be deemed to have been "sold" when you die, which means the estate could face a hefty tax bill for items such as capital gains. A number of strategies can help ease the tax burden, including transferring assets to children while you're alive. Trusts within your will can also be used to save tax for beneficiaries after you are gone.

Life insurance: Life insurance coverage can supplement your wealth and help provide financial security for your beneficiaries, and can be utilized to pay the taxes that may arise on death, thus preserving capital accumulated.

Business succession plan: Business owners should have a plan for their enterprise. This may involve selling the business and distributing the assets to heirs, passing it along to children or stipulating who should manage the business. In most cases, the succession process should begin long before retirement, not at the time of retirement or when you die.

Enduring Power of Attorney (POA): You may need help with your assets while you are alive. If you are incapacitated and unable to manage your financial affairs, an Enduring POA can give a trusted spouse, friend, or relative the power to manage your affairs.

As mentioned, your Estate Plan should be considered part of your overall Financial Plan. Your Estate Plan takes your strategy one step further, allowing the wealth you build to provide for your loved ones after your death. Let us help you get started on your Estate Plan - this one area where good professional advice is crucial.