On most to-do lists, estate planning usually doesn’t get top priority. Many of us don’t like to think about leaving our family and loved ones behind. It’s easy to put off writing a will — so easy that it often takes a life-shattering event, like a terminal illness or a death in the family, to get us to start.
Yet estate planning is done for the people you love — and these people are a top priority. That’s why it’s so important to take the time to plan. Investing time in estate planning now can prevent costly legal and financial troubles later, not to mention the relational conflict that not having a plan can create.
At Bick Advisors, we believe that estate planning is really “people planning.” While it’s about your estate, it’s really about the people who your estate plan is for. This blog post highlights the various tools available to you — through the form of commonly asked questions — to help you protect, build, and preserve your assets, so your heirs will receive the legacy you intend to leave them.
What is estate planning?
In case you’re unsure what exactly estate planning is, a simple definition is: the process of anticipating and arranging for the management and disposal of your estate during your life.
An “estate” is all of the money and property you own at the time of your death.
Do you have a will in place?
The first step to an effective estate plan is a will.
A carefully drafted will is a legal document that outlines how you want your estate to be divided after your passing. It sets out precise instructions that help your estate representative deal with your estate when the time comes.
You’re not legally required to prepare a will. However, if you don’t have a will, the laws in your province or territory will determine how your estate is divided. Provinces and territories set the laws for estates.
Do you have a marriage contract?
If you’re planning to marry (or remarry), it’s important to understand how this can affect your estate. In some cases, for example, the validity of your previously signed wills could be impacted due to your marital status. That’s why a marriage contract is a good idea if you or your spouse are bringing significant assets into the marriage.
By making sure you have a contract that clearly states how you will divide your assets if the marriage breaks down — or how your assets will be handled if you pass on — your estate value is protected, and your wishes can be honoured.
Who are your powers of attorney?
A “power of attorney” is someone you trust to make decisions on your behalf if you become unable to make decisions for yourself — whether through illness or death.
Lawyers can help your prepare two key powers of attorney documents:
- A general power of attorney is a legal document that can give your attorney authority over all or some of your finances and property.
- An enduring or continuing power of attorney is a legal document that lets your attorney continue acting for you if you become mentally incapable of managing your finances and property. It can also give your attorney authority over all or some of your finances and property.
It’s important to note that each province and territory has its own laws relating to powers of attorney. We recommend you get legal advice to be sure that your document is valid based on the province you reside in, and to fully understand what abilities and power you’ve given your power of attorney.
Who do I choose an executor?
An “executor” is a person or institution whom you appoint in your will to carry out its terms.
Executing a will can be a large and complex job. As you think about who you want to take on the job, consider who’ll ensure the instructions in your will are carried out. It’s important to remember it requires time and expertise to manage an estate properly.
While you might appoint a family member, you could also choose to work with professionals who have both the experience and perspective to execute larger, more complex estates. A financial advisor can work with you in selecting the right executor to meet your situation and will support your executor when the time comes.
Do you have any registered plans with named beneficiaries?
If you hold registered accounts like a TFSA, RRSP or RRIF, you may want to consider naming a beneficiary on the account. This will allow proceeds from the registered account(s) to be passed down outside of your estate — minimizing probate tax. (“Probate” is the process by which a court confirms that a will is valid.)
When naming a beneficiary on a registered account, it’s important to remember the other bequests in your estate. It’s also important to name other (“contingent”) beneficiaries in the event one of your primary beneficiaries passes away before you.
Who can help me with my estate planning?
No matter what stage of life you’re in, having a solid plan for your estate ensures your wishes are honoured and your beneficiaries receive the legacy you intend.
Preparing now can save you and your family the emotional stress and potential conflict of having to make decisions about your finances and care if your wishes are not known or can no longer be communicated.
Estate planning can be a complex and daunting task. Our advisors can help you understand, select, and combine the strategies available that will work best to protect you and the people you care for. Schedule a meeting today!