Estate planning
You don’t have to be an eccentric billionaire to need to organize your estate. An estate plan is important to ensure that financial matters are resolved quickly, and family and loved ones don’t end up losing much of what you’ve acquired through taxation. Talking about oneself or aging parents passing away isn’t exactly a fun topic, albeit an important one.
Preparing for that eventuality can be difficult, but also can give one peace of mind. Two tools often used is the power of attorney and joint bank accounts. Without thinking about these topics and talking to a lawyer about the power of attorney, your affairs can be left up to someone else to decide.
Of course, elder abuse is something that society is more conscious of, and seniors should never be pressured or forced into signing a power of attorney, or open joint bank accounts. Opening a joint bank account can give you, or someone you trust the ability to pay bills or to access your funds for you, before or even after. Power of attorney allows someone to legally act on your behalf to manage your legal and financial affairs. You and your loved ones should consider carefully what is best for you, and it doesn’t hurt to consult an attorney.
It goes without saying that having an up-to-date will is important. If you die without a will, the government distributes your estate in accordance with provincial law. Only a will can ensure that your wishes are fulfilled.
If you already have one, keeping your will updated as you go is also important, if you have more children, new assets (if your current will is specific to the asset distribution) or if you marry, it can make your current will invalid. Again, use a professional to help you with your will, as do it yourself wills may leave things open to interpretation.
When it comes to distributing your estate, whether it’s a million dollar farming operation, a small nest egg, or the family home and your collection of treasures, it’s more complicated than just dividing your stuff. You’ll need to determine all your assets, including from pensions, investments, stocks and bonds, real estate and personal property. You’ll need to note which assets are owned jointly, as well as who the beneficiaries are for your RSPs and insurance policies.
Once you’ve collected the list of all your assets, you’ll need to decide on your goals. Obviously you’ll want to protect as much as possible from taxation, and you’ll want to make sure you have enough liquid assets to handle any outstanding debt you may have so your heirs won’t have to sell off physical assets or investments to cover those debts.
Two good ways to protect your assets from taxation is to gift assets, or establish trusts before you pass on. Keep in mind that both can by complicated depending on the tax circumstances of your beneficiaries.
Connect with us to help you navigate your next steps financially. It’s never easy to talk about, but it’s all part of life, and we all need to make sure it’s done correctly.
