What You Need To Know About Estate Planning: Part 1Submitted by MacDev Financial Group on April 30th, 2019
Today’s complicated family dynamics, escalating divorce rates, and multiple marriages give new credence to the importance of estate planning. Your estate is basically everything that you own at your passing after debt and taxes are paid.
Estate planning is the act of preparing for the transfer of your wealth and assets that make up your estate after your death, while aiming to minimize gift, estate and generation skipping transfer and taxes. Pensions, real estate, vehicles, investments, personal belongings, and debts are all considered part of an estate. Life insurance proceeds, can be a part of the estate or can be kept separate, depending on the intentions and decisions of the policy owner.
Why Estate Planning Is Important
Estate planning gives you control and helps to eliminate potential estate-related family feuds. More than that, estate planning is really an important aspect of wealth management and preserving your legacy. Not having an estate plan in place can cost your family financially. And without a Will, the courts and government are left to decide such things as distribution of property and assets based on provincial intestacy laws and even guardianship of children if left undecided.
An estate plan also protects your heirs from having to overpay estate taxes. Even the smallest amount of estate planning can help you reduce your estate taxes substantially which can be very expensive without a Will. By having an estate plan, you protect your loved ones and assets based on your wishes, control and authority.
However, estate planning is not for the faint of heart as it forces us to confront our own mortality and deal with issues we would probably rather avoid. In fact, according to a recent BMO survey, 48 percent of Canadian survey respondents reported they didn’t even have a legal Will.
Having A Legal Will
A Will is your last love letter to your family. It is also the most critical piece of your estate plan. As a legally-binding statement, it outlines your intentions and wishes in terms of the distribution of your property and assets and guardianship of any minor children after you are gone. In your Will, you appoint a person or organization to act as the Executor of your estate who is responsible for the distribution of your estate. Without a Will, the government is likely to determine the distribution of your property and aspects of your estate. A Will also is a critical legal document for determining the guardianship of minor children. Without a Will, guardianship will fall into the hands of the courts.
After your death, your Executor must apply to the court to confirm your Will is legally valid in a process known as probate (probate meaning “proof”). Probate fees must be paid to the court registry proving your Will is legally valid. The amount of fees paid are based on the value of your estate at the time of filing and may differ according to each province.
It’s important to assign a beneficiary for certain assets of your estate such as life insurance policies and retirement and investment accounts. Most of the time a beneficiary will probably be a spouse, child or grandchild. However, a beneficiary can also be a charity of your choosing.
Your beneficiary is basically the person or organization who will receive the benefits of such assets after your passing. Beneficiaries on life insurance policies and retirement savings plans also supersede the provisions in your Will. Having a beneficiary designated on investment accounts such as RRSPs is also necessary to avoid probate fees.
A good tip is to make sure your beneficiaries are well documented and match up with what’s detailed in your Will. Reviewing and updating your beneficiaries on a regular basis to reflect major life changes such as divorce or remarriage is also advisable.
A Last & Final Letter
A *Last & Final Letter such as the one created by MacDev Financial for our clients (MacDev_LastLetter-Web.pdf) is a great tool to supplement your legal Will. It is a letter that provides a detailed record of where all your important documents are located upon your death such as your Will, Life Insurance Policies, Bank Account Information, Computer Passwords, Marriage and Birth Certificates, and other important documents. It can also include a checklist of action steps your Executor must undertake to settle your estate and affairs such as notifying financial contacts and completing key tasks.
Disclaimer: The material and/or information provided in this blog document are for informational and/or educational purposes only. The opinions and views expressed in this blog document are solely those of the author and not necessarily those of the distributor, and do not constitute financial or taxation advise in any way. All financial endeavors should be vetted through a financial, tax, or other appropriate professional; example, life insurance broker, financial planner, accountant, and/or lawyer, as the audience sees fit. MacDev Financial Group Corp. and SET Financial Solution and any other corporation associated with the author, including but not limited to its agents, staff, associates and/or partners, will not assume any liability for any information disseminated in this blog document; indirectly, or assumed.
*Disclaimer: This document known as the “Last and Final Letter” in no way substitutes or replaces a Will & Testament, of which you are strongly urged to have in place. MacDev Financial Group Corp. and its Licensed Life Insurance Brokers—or any other contracted consultants, employees, and/or associates of MacDev Financial Group Corp.—assume no liability whatsoever for the use of this “Last and Final Letter”, as the content is only a suggestionto what could be included in an instructional letter to loved one/s in case of your passing; please change as you feel appropriate or ask your Broker for advice. We reiterate that in no case whatsoever, is this “Last and Final Letter” to be used as a replacement or substitution for your Will & Testament.
Your MacDev Financial Life Insurance Broker is available to consult on the financial contents of your Will should you require assistance in working with your legal representatives.