In spite of our world feeling upside down right now, life is still moving forward. We have had clients get engaged during this pandemic, separate (although not quite physically yet), pass away, and a few others are moving. Life does go on.
With all the changes, in life, it reminds us that it is a good time to do a review of your estate planning. Here is a checklist to get you started:
Your Estate Goals:
- This is the starting point. Who would you like to support after you are gone, including any charitable requests?
- Have you considered the costs of your passing including taxes and factored that into your planning?
Make or Update your Will:
- In a will, you state who you want to inherit your assets. You also name a guardian for your minor children should something happen to you and the other parent.
- If you don’t have a will, you die ‘intestate’ and your assets will be distributed according to the Wills, Estates and Succession act, so you have no say in who gets what or who administers it for you. If there are children, the Public Guardian and Trustee will manage the money until the children reach 19. It often means delays, extra expenses and considerable inconvenience for your survivors.
- Is your will current and reflects your wishes? Should anything be updated?
- If you are needing to draw up or update your will and have it witnessed you can still do so even when social distancing. Please check out the link below for more information. Click below to learn more about how to witness a will during COVID-19.
Consider a Trust:
- If you hold your property in a trust, your survivors will not have to go through probate court, which saves time and money. You also get to state when you’d like your beneficiaries to receive their inheritance which is a good idea, especially for young adults.
Review your Life Insurance:
- Life insurance is often bought to protect a family lifestyle should someway pass away early or to protect an estate from a big tax liability.
- Life Insurance can have a designated (named) beneficiary so the proceeds go directly to that person (s). It is usually fairly quick, and it bypasses probate which saves time and money. The money is also paid confidentially.
Review your Beneficiary Designations:
- In addition to life insurance, registered investment accounts such as RRSPs, RRIFs, TFSAs etc. can have a designated beneficiary. The proceeds of the investment account will be rolled over to a spousal account or paid out directly to a beneficiary. Again, this would buy pass probate.
Consider Segregated Funds:
- Segregated funds are mutual funds offered through an insurance company that include a few benefits. They have guarantees and creditor protection. One big advantage is that they also have a designated beneficiary so they are paid out without going through probate.
Prepare or Update your Power of Attorney:
- With a power of attorney, you can give a trusted person authority to handle your finances and property if you become incapacitated and are unable to handle your own financial affairs.
Ownership of your assets:
- If you jointly own assets with rights of survivorship and you pass away, ownership will pass directly to them. These assets won’t go through your estate. If you own assets jointly as tenants in common, this is an asset that you can pass on to the beneficiary of your choosing.
Protect Your Business:
- If you are a sole proprietor or own a business, you should have a succession plan.
- With a living will you can specify health care instructions and choose a representative to carry out your wishes.
- When you pass away there will be certain expenses that are required up front (funeral costs, final bills, etc.) as well as over the long term (income tax, probate fees).
- Make sure that you have some cash that is accessible for your executor to pay bills as they come up.
Store your documents:
- Ideally, you have a system wherein your executor or trustee can find the documents easily when needed. Consider things such as account numbers, passwords for online access, etc.