Estate planning is not something that concerns only the rich or the elderly. Everyone should have an estate plan. If you are over 50, please take care of this as soon as possible even if you think you have very little to pass on.
Take a few steps now so that your possessions will be passed on to the people or organizations that you want to have them. Protect what you’ve worked for from needless taxes and legal expenses so more of it goes to the people you intend it to.
A will is a legally binding document that states how your property will be distributed upon your death. You can name an executor who will be responsible for notifying your beneficiaries and making sure your wishes are carried out.
Get help from the pros – lawyer and possibly a financial planner or tax advisor – if you need more than the basics. Wills have to be done correctly to be valid and probate fees can vary widely between provinces.
Why Do People Put Off Making A Will?
People give lots of reasons for putting it off. They don’t have the time, they don’t understand the jargon, they find the whole process intimidating, or they don’t want to think about it. The two biggest reasons are plain old procrastination (I have lots of time to get to it) and thinking there are not enough assets to worry about. Don’t you want your wishes to be followed? Still, people put it off.
What Happens If You Don’t Plan?
Only about 50% of people who die have an estate plan. If you don’t specify what you want done with your estate, someone else will. The court will appoint a guardian for your minor children. Your beneficiaries will be designated according to provincial law in an established order. Your estate may be subject to needless taxes and administration fees. Distribution of assets may be delayed.
With some careful estate planning you can reduce, defer or eliminate the tax your estate will pay.
Estate Planning: Making Your Wishes Known
If you are married and have children, you probably want to leave everything to your family. Think of the bigger picture. Beyond your family you may want to leave something to your university or a charity you value.
Maybe there’s a close friend or relative you’d like to help out. An inheritance can make a big difference in someone’s life or the good works of a charitable organization.
What About Your Kids?
The issue of whether or not to leave large estates to children is a big one. Warren Buffet says that the right amount to leave children is “enough money so that they would feel they could do anything but not so much they could do nothing.”
A large inheritance can be a lot to put on a kid. Could they handle large amounts of money? What degree of control do you want?
If you have children who are minors you need to name a guardian for them. Your estate planning process should include your wishes about how they should be raised and by whom. How old will they have to be to get their inheritance outright?
Leaving part of an estate to charity is surprisingly uncommon. This is a place you can truly make a difference, whether a non-profit or charitable organization or field of research.
You can specify a dollar amount or percentage of your estate, leave a specific asset such as a work of art or stocks, or name them as a beneficiary to your insurance policy. This can give your significant tax savings. If it appeals to you, talk to someone at the organization of your choice for assistance.
This is a legal process that is used to value your estate, settle any debts, pay taxes and make an orderly distribution (or transfer of title) of your assets to your heirs.
You can avoid probate by establishing a trust. Also, many people put assets into joint tenancy, but this often can have unanticipated results.
Whether you lean towards a “die broke” approach or hope to pass on your assets to your family or charity, the decision about what happens to your money and possessions should be yours. What you decide on isn’t set in stone. Most plans can be revised at any time as long as you’re considered mentally competent.
When it comes to estate planning, you are better off doing something now and amending it later than doing nothing at all.