4 estate planning tips
Nobody likes to think about death or the burden it often represents for those we leave behind.
Yet, it is important to be ready. Don’t postpone this important task―the decisions you have to make won’t be any easier in 5, 10 or 20 years!
1. Make a will
A will that clearly identifies your heirs is essential regardless of the value of your property. It safeguards your family’s financial security and goes a long way to prevent turmoil and conflict.
Are you in a common-law relationship? If you are, then you need a will to avoid decisions imposed by the law.
Are you part of a blended family? Then a will becomes even more important as a means to administer the situation for your heirs.
Estate planning is not just for those with a lot of money. You’d be wrong to think that a house and modest retirement savings doesn’t warrant a will. You have to plan the transfer of your assets regardless of their worth.
2. Appoint an executor
Choose an executor (also called liquidator) you can trust. Tell them of your decision and make sure they are willing to understand what they are getting into and accept the responsibility.
Don’t underestimate the work involved and try to make the task as straightforward as possible:
- Keep all the documents pertaining to your property, investments, insurance policies, etc. together in a safe place.
- Draw up a list of your assets and keep it up to date.
Considering the complexity of the role of executor, you may want to set aside an amount of money as compensation for the person.
3. Think about the fiscal impacts
Upon your death, your property will be considered as being sold and the applicable income tax will apply. This could cause major headaches and financial stress for your loved ones.
Take out life insurance:
- The policy proceeds paid out to your designated beneficiaries upon your death are not taxable.
- This money can be used to pay your funeral costs and debts, if any.
- If you own a house or condo, the money can be used to pay the capital gains tax and avoid your heirs having to sell your property.
Ask your advisor for advice on minimizing fiscal impacts of your death.
4. Discuss it
Discuss your plans with your family. Nobody will welcome the topic but they will be happy to be informed and know you aren’t leaving anything to chance.
When the time comes, your heirs may be feeling overwhelmed and the legal ramifications may be a lot for them to deal with. Your planning will make things easier for them!
And your golden years?
What happens if you are no longer able to manager your affairs due to illness or an accident?
A protection mandate is the answer. This document is used to appoint someone to take care of you and your finances if you are no longer able to.
Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ cannot be held responsible for any decision made as a result of reading this blog post.
Original post from SSQ Blog: https://blog.ssq.ca/en/finances/4-estate-planning-tips
