On the face of it, estate planning sounds like an easy enough job. After all, distributing your assets, accumulated over a lifetime of toil, among your loved ones in the event of your death, requires only a properly worded will, doesn’t it?
Actually, no.
Firstly, estate planning isn’t just about making provisions for your family and distributing your wealth, but also managing your debts, if any, after your death. Thinking about one’s death isn’t a cheerful prospect, but it is a necessity. It is something you must do right now, when you are fit and well, so that in case misfortune befalls you, your family and friends are well taken care of.
So, how does one go about proper estate planning to avoid confusion, friction, and sour relationships in the future?
A 5-Step Guide to Making Your Estate Plan
Preparing a legally binding, proper estate plan takes specialized knowledge. So, hiring a trusted legal advisor as well as a financial advisor with expertise in estate planning would be the very first step. Once these experts are on board, here is what you need to do:
1. Cataloguing Assets
You can begin by first identifying and cataloging all the assets you currently own, both business and personal. These would include everything from financial assets, investments, and real estate, to tangible things like furniture or jewelry, and heirloom pieces. Additionally, consider any outstanding debts at this stage. Life and death are uncertain, so it is prudent to make provisions for paying off any exceptional debts without burdening your loved ones.
2. Deciding Beneficiaries and Executors
Having cataloged all your assets and debts, you then need to determine who the beneficiaries of your estate will be carefully. This part can be as detailed as you like – who gets the heirloom family table, who gets your favourite car, who takes over the business reins.
Most importantly, to whom would you like to entrust the care and responsibility of your minor kids, if any? This is a very delicate issue and requires careful consideration, as the guardian would have to be someone who will provide your children with the love and values you would have given them yourself. So, take your time with this step.
Just as crucial as the beneficiaries are the executors – the people you will choose to ensure that all your wishes are duly followed. Naming secondary executors is also a good strategy, in case the primary executors are unavailable to fulfill their duties for any reason. You will also have to inform and ask your chosen executors if they are willing to undertake this responsibility before going to the next step.
3. Handling Documentation
After thinking through everything, it is time to pen it down,detailing all your above wishes and plans in a legal way with the proper documents, including a –
(a) Will: A wishlist to be executed after your death, detailing the distribution of your assets among your chosen beneficiaries, as well as your preferences for the guardianship of minor children, if any.
(b) Power of Attorney: A document granting authority to a person of your choice to handle any legal, financial, or property-related duties on your behalf in your absence.
(c) Living Will: A document granting authority to a person of your choice to make medical decisions for you in case you are incapacitated.
(d) Letter of Instructions: A list of instructions for your family and friends to guide them after your demise. These can include instructions for funeral arrangements, charitable wishes, passwords to digital or financial accounts, and more.
You must sign the will and Power of Attorney (POA) in the presence of two witnesses. Avoid choosing a witness who will benefit from the will.
These documents act as a guide to your lawyer and loved ones in your absence. They are legally binding and can help prevent disputes or conflicts within the family over wealth distribution.
4. Consistency and Updating Details
Ensure consistency in the names of beneficiaries in all documents and plans you create for the future, especially after significant family events such as the birth of a child, marriage, or divorce.
Additionally, the time between drawing up your will and its actual execution will likely involve many ups and downs; your relationships, views, or preferences may change, and even your place of residence may shift. Some beneficiaries and executors you named in your will might no longer be around to fulfill their duties. Thus, it is vital to regularly review and update your estate plans and documents as per such changes in your life to avoid complications in the future.
5. Accessibility
Contrary to common belief, secrecy in estate planning often leads to significant difficulties and losses. It is vital to involve at least some trusted people in the process and keep them informed of the decisions you are making. This is especially true for the chosen executors, as they may or may not be available to undertake responsibility. It is also essential to store your will in a place that is known and accessible to your lawyers and family after your death. You can place it in a safe deposit box, with your lawyer, or register it with the Canada Will Registry.
There is no “right” age for estate planning. But given the uncertainty of life, having the plan in place sooner rather than later will give you peace of mind. Estate planning and dealing with the idea of death are not easy. But consider this – it will make life easier for your family and loved ones, helping to keep your legacy and values alive long after you’ve passed. And that’s worth all the effort.
Contact Black and Gill LLP in Etobicoke for Expert Estate Planning Advice
A will is one of the many estate planning tools, but it is not the most tax-efficient, as it attracts probate fees, attorney fees, provincial fees, and more. A skilled tax advisor can help you plan your estate transfer using various tools such as life insurance, trust, holding company, and gift, and allow your estate to take care of the taxes that trigger at the time of inheritance. To learn more about how Black and Gill LLP can provide you with the estate planning expertise, contact us online or call us at 416-477-7681 today.