Will & Estate Planning

  • If you were to die yesterday, would your estate be distributed according to your wishes?
  • When you die, who will take care of your children? What will happen to your home? How much of your estate will your heirs get? How much will go to Revenue Canada?
  • What would happen if you and your spouse die at the same time? What if the person you appoint to carry out your wishes (called an executor) is unwilling or unable to do so? What if your beneficiaries die before you?

Answering all the above questions before you die is the purpose of estate planning and a well drafted will should address some of the above key questions. No matter what your age, if you have dependents, or have accumulated any assets, you should start putting some estate planning strategies to work.

By planning your estate today, you'll have as much say as possible on what happens to your family and your financial assets when you die. A will is more than a way of showing how responsible, thoughtful and generous you are — or, at least, were.

If financial planning is the way you build assets, estate planning is ensuring those assets are managed in a way that serves you and your family best, both now and after you die. Estate planning is not the preserve of the old and the wealthy. While you may not think your assets amount to much, even a mortgaged home can become a substantial asset if the loan is life insured.

How to Start
The best place to start is with a trip to your financial advisor for a properly drawn up will and power of attorney. Next, based on the complexity of your plan, your financial advisor might recommend a visit to a lawyer and an accountant.

You will need sound tax advice to ensure as little of your hard–earned money as possible goes to Revenue Canada and provincial probate fees. But don’t get too caught up in tax–saving strategies in case you lose sight of your main objective: To make sure your family and loved ones are cared for now and when you die, whenever that may be. The consequences of failing to plan properly are more serious than you might think.

Everyone over 18 with assets of any kind should have a will. Yet a recent survey commissioned by the Trust Companies Association of Canada shows that half of Canadian adults do not.

The Consequences of Dying Without a Will
Dying without a will can have unhappy consequences for your family. If you die intestate (without a will), the provincial government will step in and appoint someone to distribute your assets.

The Impact on Your Children
Rules vary from province to province, but the ramifications are sobering. To begin with, your children’s share of the estate will be held in trust until they are 18, even though they may need money before then. A rule with equal potential for disaster is that at 18, they will receive the entire amount, whether or not they are mature enough to manage it.

A will is the only place where you can elect who you would like to be the guardian of your children. Without a will, the courts will decide who raises them.

In addition, depending on where you live, your common–law spouse may not be entitled to a share of your estate.

Dying without a will can also seriously affect the value of your estate. For example, your estate may have to pay income taxes that could have been avoided. Further, taxes due as a result of your death may force the sale of the family cottage — or even the family business.

Your beneficiaries may also suffer from the inevitable delays in settling your affairs. It may result in family strife, and costly legal challenges or other fees that might have been avoided. There will be no gifts to a friend or favourite charity because they’re not included in the government formula. There will also be no trusts to provide for special needs.

In short, the distribution of your assets may not reflect what your beneficiaries need or what you would have wanted.

If these warnings sound ominous, they are. The message is loud and clear — a will is one of the cornerstones of financial planning. If you have a family, or have accumulated any assets, have one prepared — and soon.

If you have a spouse only, your estate will go to her or him. If you have children but no spouse, your estate will pass to your children. If you have neither spouse nor children, your estate will go to your next of kin — parents, brothers and sisters or nieces and nephews.

MoneyWI$E Financial Inc. can advice you to reduce taxes by showing you how to legitimately transfer assets to a living trust. You may also want to pass your family business on to your children so future capital gains will be taxed in their hands or you may want to set up a spousal trust, a financial power of attorney etc.

MoneyWI$E Financial Inc. consulting fees are $150 per hour, and $100 to prepare a simple will. And for the more complicated plans, we shall recommend an estate lawyer. However, under certain circumstances you might not have to pay any fees.

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