Why Estate Planning Matters
Death is not an easy topic to discuss, but it is one reality we all share. Because of that, it is important to plan for the future. Let’s look at the basics of estate planning and how our financial advisors can help you prepare.
Estate planning is the process of organizing your legal, financial, and personal affairs so your wishes can be carried out if you become incapacitated or pass away.
A well-designed estate plan can protect your loved ones, reduce taxes and delays, and ease stress during difficult times. It also helps ensure your wishes are followed, which can reduce confusion and conflict.
A strong estate plan often includes legal and accounting advice, along with guidance from your financial advisor. Here are some of the main areas a comprehensive plan should address.
Planning Considerations in Your Estate Plan
Children
If you have children who may need guardianship, consider naming guardians, establishing trusts, and protecting funds until they reach the age you choose.
Business Succession
If you own a business, identify potential successors, plan for liquidity and taxes, and coordinate your personal and business estate planning.
Digital Assets
Create a secure inventory of online accounts, banking logins, and digital files, along with clear instructions for access.
Keeping Your Plan Current
Review your estate plan every three to five years, after major life events, when laws change, or when your financial situation shifts significantly.
Working With Professionals
Estate lawyers: Draft and update legal documents, provide legal advice, and finalize estate documents.
Financial advisors: Review assets and beneficiary designations, help coordinate the planning process, and provide ongoing guidance, including insurance considerations.
Accountants: Advise on the tax implications of your estate and work closely with your financial advisor to explore available options.
Core Documents
Will: In the event of your death, a will sets out how your assets will be distributed, names beneficiaries, appoints an executor, and may name guardians. Without a valid will, provincial intestacy laws determine how your estate is divided.
Power of Attorney for Property: Allows someone to manage financial affairs, banking, investments, and property matters on your behalf, while you are still living.
Power of Attorney for Personal Care or Advanced Health Care Directive: Another document that is used while you are living, it authorizes someone to make health care decisions and communicate your end-of-life wishes.
Records: Keep account numbers, document locations, and advisor contact information organized and accessible.
Key Roles
These responsibilities should be assigned with care. Have in-depth conversations with the people you are considering, since these roles require time, effort, sound judgment, and emotional readiness.
Executor: Choose someone organized, trustworthy, and willing to collect assets, pay debts, and distribute your estate. This role is essential and can feel overwhelming, so it is important to choose carefully.
Powers of Attorney: These may be the same person or different people for property and personal/health care. Discuss your expectations in advance so the person understands the responsibility. These roles are ones that can be needed prior to death, in case of incapacitation.
Key Assets
Real estate: Include your primary residence, rental properties, and cottages. Keep records of locations and supporting documents.
Registered accounts: Review TFSAs, RRSPs, RRIFs, and employer pensions, and keep beneficiary designations current.
Other assets: Business interests, life insurance, digital assets, and personal property should all be carefully inventoried.
Beneficiary Designations and Tax Planning
Your estate plan will include many important details. Beneficiary designations for registered accounts, life insurance, and charitable giving can all play an important role.
RRSPs, RRIFs, TFSAs, and life insurance proceeds can pass outside your will when beneficiaries are named. Keep those designations current after marriage, divorce, births, and other major life changes.
Life insurance can provide liquidity to help cover taxes without forcing the sale of assets.
Strategies such as spousal rollovers, trusts, and charitable giving may help reduce estate tax liabilities.
Protect Your Legacy
Creating a strong estate plan takes time and thoughtful preparation, but the peace of mind it provides is well worth the effort.
By planning ahead, you can help protect your family, preserve your legacy, and ensure your wishes are carried out.
We’re here to support you through every step of the process with guidance, expertise, and care.