It’s never too early to get around to planning for the transfer of your estate. And it’s simpler than you think. Find out more about the benefits of having an estate plan and check out our seven-step guide to help both you and your loved ones achieve peace of mind.
Succession planning is a game plan that outlines all the important actions and decisions to follow. Basically, it entails:
You don’t have to wait until you reach a certain age to work out the details of transferring your estate. Whether you’re a parent to young children, an investor with major financial assets, an entrepreneur, or a retiree, the sooner you plan your estate the better.
This should be at the top of your list of priorities, before you even sit down to write your will. Talk it over with your bank advisor or financial planner.
You should ask yourself what you want for your loved ones after you pass, and how your assets could help them. The idea is to prioritize your estate goals, even if it isn’t always easy.
Try asking yourself if you’d like to:
Take inventory of your possessions and gather all the documents you need for your bank advisor or financial planner to accurately analyze your situation. Plus, it’ll be easier for your loved ones, who won’t have to manage all of this after you pass away.
If your situation changes (divorce, new union, purchase of property, birth of a child, etc.), review the information in your inventory and schedule of assets. Most of all, keep all these documents in a safe place and let your loved ones know where they are.
When planning for the transfer of your estate, you’ll have to designate several key people who will help ensure your wishes are respected. Consider designating replacements in case certain people are unable to fulfill their roles.
Here’s a list of key figures and their roles:
Estates with a will usually take less time to sort out and are simpler to manage. Regardless of the kind of will, the most recent one will prevail upon your passing.
There are three kinds of wills:
If you pass away without a will (ab intestate), the Civil Code of Quebec has rules for designating the beneficiaries and distributing your assets.
In Ontario, the Succession Law Reform Act outlines these rules and dictates how an estate is distributed. For other provinces and territories, please refer to the relevant laws.
It’s often the basic level of financial protection for your loved ones after you pass away. It’s not taxable and the money can be used to pay your taxes or cover your funeral. Choosing your beneficiaries is important.
Before signing up for this kind of insurance, you should first figure out whether you can achieve your goals without it. If not, determine how much money you need to reach your goals and select your policy accordingly, especially if there are probate fees or debts to pay after you pass away.
A tax expert or other professional could help you make sure that everything is in order; they could even point out ways to optimize your financial plan.
Your estate will have to pay tax on capital gains, tax on the balance of your registered retirement plan income, and depending on the province, probate fees calculated on the value of the estate (there may be probate fees if you own a cottage in Ontario, for example). Let your loved ones know that they should speak with a professional before liquidating your estate. This may allow them to possibly use a better strategy and reduce the tax impact before everything is sold off.
If you own a business or own shares in a company, those shares are part of your estate. This is more complex, so speak with an expert in banking solutions for businesses in order to build a personalized strategy for your estate.
By taking care of other matters related to your death, you’ll be giving your loved ones peace of mind. They will be able to grieve without having to make quick decisions about your affairs.
In any case, make sure to inform your loved ones of the steps you’ve taken. Estate planning is a complex but necessary process that’s unique to each individual. No one likes thinking about their own death, but try to think of estate planning as an act of love towards your loved ones. Feel free to speak with an expert for guidance. We’re here to answer your questions.
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