Most people I know associate “estate planning” with “getting old.”
Therefore, as their logic would have it, if you are not “getting old”, then you don’t need estate planning. Why hurry? And wouldn’t the estate plan need to be re-done anyway when you eventually do get to be “old”? And so, they scramble to finish their “to do” list for today — and leave estate planning for later.
It’s no wonder that “estate planning” goes to the bottom of everyone’s list!
And if life were predictable and linear, that would be just fine.
But whether you’re 35 or 95, you could have a fatal accident next week or even tomorrow. If that were to happen, would your wealth be distributed to benefit the people you most care about — or by following obscure small print in your provincial laws? Do you even know what those laws are? Is there an upcoming legal change at the provincial level that may leave your loved ones without access to the funds they need to keep a roof over their heads?
And this isn’t just about the money.
Will your great aunt’s valuable jewelry go to the person who will appreciate its beauty — or will it end up sitting on a garage shelf in dusty Zip-lock bags? Or how about that hockey card collection that goes back to the 1950s? Finally, will Fluffy and Fido move smoothly into new homes with loving owners — or will your family have to scramble to place them, or worse yet, surrender them to the local shelter?
Estate planning allows you to have a clear answer.
And it doesn’t have to be complex, scary, or extremely time-consuming. You just need a few pieces in place to start.
Here’s what you need to know.
Your Will dictates who will get your tangible and intangible property. It also spells out your decisions for your family, i.e. who will care for your minor children if both parents are deceased. Without a Will, the children would go to Social Services. They will then work to place them with family, and their decision won’t necessarily align with what you would have them do.
But your Will alone isn’t enough.
You see, your Will must go through the Probate process. Probate takes time. For this reason, many families opt to also create a Trust. Setting up a Trust is an additional up-front expense, but it lets you get more specific about the way your assets will be distributed. Special-use Trusts can be established for charitable giving, tax reduction, or your children.
If you choose to set up a Trust, you will have to appoint trustees to manage the funds (or the assets in the Trust, such as your family home) on behalf of the beneficiaries.
Choose your trustees with care. Depending on Trust setup, they can enjoy a great deal of control and discretion.
Your trustee could be one person, such as your spouse or another close relative. Or you could arrange for multiple co-trustees. You could also name a bank or an lawyer as your trustee. Trustees will pay bills and taxes, comply with provincial and federal law, and make other decisions as needed. Being a trustee is a significant responsibility. It can also demand a certain time commitment.
To complete the first round of your estate planning, you will also need a health care proxy. This document names the person to make your medical decisions if you aren’t in a position to communicate. Choose someone who shares your values and who will respect your wishes.
How do you go about creating your estate plan?
Set aside the time to work on it. If you already have an estate plan, review it every year and each time your circumstances change. Marriage, divorce, home purchase or home sale, children or grandchildren being born can all call for revisions and updates to your estate plan.
Remember that estate planning documents aren’t complicated — but they do take time. It’s a good idea to consult with experts who can advise you about the laws of your province. An expert financial planner will also make sure you cover all the bases, so that your loved ones will be protected.
If you don’t know where to begin, or if you need an expert to take a look at your estate plan, call us at MDL Financial Group. We are happy to help!
