Generally when you hear the words Estate Planning, we think of a Will and Powers of Attorney. We also tend to think of this as a task for those individuals in their mid to late years of life, who have a vast array of assets. However, estate planning is not reserved for just those individuals as nearly everyone has an estate. Your estate is comprised of everything you own— your car, home, other real estate, chequing and savings accounts, investments, life insurance, household and personal possessions. Furthermore, good estate planning is much more than just a Will and Powers of Attorney, as explained below.
Estate planning is making a plan in advance for your assets to ensure your wishes are carried out and so your estate will hopefully pay the least amount paid in taxes, legal fees, and court costs when the time comes. Estate planning allows you to control the what, the how and the when, your assets will be distributed to the people and/or organizations you choose.
In addition to the preparation of a Will and Powers of Attorney for Property and Personal Care, estate planning should also:
- Review what assets make up your estate and consider their treatment on death.
- Review and consider beneficiary designations on assets.
- Look to minimize taxes, court costs, and unnecessary legal fees through proper planning.
- If you have shares in a private corporation and/or run a business, consider for the treatment of your business at your retirement, disability, or death.
- Consider and if necessary, name a guardian and a trustee (think of it as an “inheritance manager”) for minor children.
- Consider and if necessary, provide for family members with special needs without disrupting government benefits.
- Consider and if necessary, provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
- Consider any requirements to protect inheritance for individuals from previous relationships or discuss the best methods to exclude individuals.
- Most importantly, be an ongoing process, not a one-time event. Your plan should be reviewed and updated as your family and financial situations change over your lifetime.
Estate planning is not a task that should be left for later in life. The best time to plan your estate is now. As unpleasant as it is to think about our own mortality or incapacity, being caught off-guard and unprepared when incapacity or death does strike can be much worse. See my blog on “Packing for School? Don’t Forget Your Powers of Attorney” which discusses the importance of estate planning when turning the age of majority.
Estate planning gives you and your family peace of mind by knowing you have a properly prepared plan in place. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.