We can’t control the changes that come with age. Our kids grow up, wrinkles grow deeper, hair grows silver (or stops growing at all), and retirement offers a new world of possibilities and challenges. Estate planning is a great way to take charge of what is within your control by shaping the kind of legacy you leave behind. It’s also an important process that ensures that you’re maximizing the value of what you own, and passing it on in a way that honours your life.
What is estate planning?
Estate planning includes any plans or decisions you make for the future of your assets and how they’ll be distributed in the event of your passing. Estate planning with an attorney involves steps like making a will, deciding who will manage your money and property, and how it will be done.
What is a will in estate planning?
A will reflects all the decisions you make in your estate planning. This document establishes the person, corporation, or company who will carry out your pre-laid plans and distribute your assets upon your death. A will also ensures that your plans are clear and will be carried out in a timely and intentional manner. Additionally, it declares how you’d like your burial and end-of-life plans to occur, and may include details about taxation, debts, and funeral arrangements.
Is a living will the same as a will?
A living will (or advanced healthcare directive) relates to your physical self, rather than the assets or possessions you leave behind. It states your preference in the event that you’re no longer able to give consent because of incapacity or illness––like if you’re on life support and someone needs to make decisions about your care. The other kind of will is more financially-focused.
The importance of an estate plan
A common myth about estate planning is it’s only for wealthy people. So while some of us have more assets than others, an estate plan is all about maximizing what you’ve got! Regardless of your goods, good estate planning is a must for everyone.
Why does an estate plan matter?
An estate plan gives you control over what happens to your possessions, assets, and money after you die. Without it, there’s no clear directive as to how your things should be divided, how your assets are taxed, and who is responsible for, or benefits from, anything you’re leaving behind.
An estate plan can also:
- Help reduce taxes and minimize fees that you and future generations pay on your estate and assets.
- Protect beneficiaries (whoever inherits your wealth or estate) from losing money or having the inheritance taken away.
- Help shape the legacy you know you’re leaving behind. A great estate plan can provide a meaningful way to give back to a cause, charity, or group of people that matter to you.
- Avoid conflict. Nothing creates disagreements like money does, and a clear plan will help keep the peace.
Estate planning checklist
If you’re overwhelmed by estate planning, think of it as a hike up a mountain. Each step gets you closer to your goal. So if you’re overwhelmed by the task, start with the first step. A good hiker prepares with good footwear, a guide, a bear whistle, water, and provisions. Similarly, estate planning can flow smoothly if you’re well prepared and rely on the guides available to you.
1. Assess your assets
To start building an estate-planning road map, take an inventory of your assets, liabilities, and debts to see the big picture.
Assets could include:
- Bank accounts, vehicles, art, jewellery, insurance policies, property, homes, registered investments (RRSPs, RRIF or TFSAs), non-registered investments, pensions, businesses, trusts, and even things like frequent flyer miles.
Liabilities and debts to include:
- Credit cards, loans, investment debt, mortgages, or family support payments.
You’ll want to have all this information recorded in one place and include clear directions on where the items or information can be found.
2. Establish your estate planning goals.
Everyone has unique needs when it comes to estate planning. At this step, establish objectives so you know what you aim to do. Here are some questions to help clarify your vision for your future estate:
- What are your main assets, and how do you picture them being distributed?
- Who will your beneficiaries ideally be, and how might your decisions affect your family?
- Do you have personal motivations for your estate? It might be just as meaningful to leave some money to a charity close to your heart as it is to leave money for your grandchildren. Consider which personal causes might be part of your will.
- What kind of support do you hope to provide, or for how long do you want your money to support these beneficiaries?
- Do you want those inheriting your wealth to have access to it right away or paid over a certain number of years?
- How do you picture your end-of-life? Funeral pre-planning and arrangements and taxes at time of death are an important part of planning your estate.
3. Hire and rely on professionals throughout the process
Wondering why you need an estate planner? You wouldn’t head into a cave expedition without an experienced explorer. An estate planner (or notary if you’re in Quebec) understands the nuances, steps, and details required for a solid estate plan. Meet with a trusted advisor to discuss your next steps based on the goals you’ve established for your estate.
Your estate planner should be well versed in every aspect of taxation and legislation regarding your estate. Each province and territory has its own estate planning laws, guidelines, and relevant tax information. Choose a planner you trust to guide and confidently walk you through every step of the process.
Meeting with a financial advisor is also helpful. Financial planners can help devise a relevant financial plan based on your estate plan.
4. Reassess your estate plan and will regularly
Taxes and legislation constantly change, so your estate planner can update you on how any changes may impact your plans. Marriage, health, family structures, or personal relationships might also change your plans. Circling back to your plan lets you make changes as your goals, wealth, health, or beneficiaries shift. You may also want to share this plan, as well as changes you make, with family members, trustees or beneficiaries who are impacted.
5. Stay informed
Connect regularly with your financial advisor to stay up-to-date on your investments and consider ways to maximize your quality of life and your legacy. Try taking an online class to learn about estate planning or how to choose a power of attorney for your estate. The beauty of an estate plan is that it isn’t carved in stone. As long as you are living, you can make changes based on your situation and objectives.
Boomerang can help you stay financially informed and healthy
Financial health is an important pillar in your wellness journey. With Boomerang, you can attend live online classes centered around physical, mental and financial wellness. Explore financial wellness classes, read about early RRSP withdrawals, and attend online health and wellness classes for seniors that include meditation training, chair yoga, pilates, and more.