Many people assume that estate planning is only for the wealthy. So, it must come as a shock to the families of all the Canadians who die every year without a will when the province takes control of the estate to decide how the assets are to be distributed. Even for smaller estates, the costs and delays of probate can have devastating consequences. The goal of estate planning is to arrange your financial affairs in a way so that your assets can be passed to your heirs as quickly and as completely as possible.
The good news for Canadians is that no estate tax is owed when an estate is transferred to your heirs after you die. The bad news, however, is that depending on the type of assets in an estate there may be "deemed disposition tax" that could seriously disrupt the financial lives of your surviving family. Properly planned estates have assets arranged and titled in such a way as to minimize any taxes payable. Estate planning tools such as trusts are often employed to reduce the exposure to taxes. Estate planning is not just planning for death; it is also essential to ensure that your affairs are handled in accordance with your wishes while you are alive. Should you become mentally or physically incapacitated and unable to manage your own affairs, tools such as power of attorney become important life planning tools.
Many people avoid estate planning because they think it's complicated and expensive, which, for most estate, is not true. While it usually requires the guidance and assistance of an estate planning professional or attorney to execute the legal documents, a lot of time and expense can be saved by organizing your financial information and determining your goals and objectives prior to meeting with one. At the very least, everyone should have a simple will, which for the amount of distress and costs it can prevent, is very inexpensive. Larger estates may require additional layers of estate planning tools, such as trusts. Still the more preparation done in advance, the easier and less expensive the process will be.
I don't charge any fees to provide an estate plan. I work hard to ensure that I can maintain a fee-free operation.
It's my hope that if you trust the plan and decide to move forward with it, that you will allow me to manage the investment accounts and insurance portion of the estate plan. However, there is no obligation to do so.
Instead of charging fees, I'm paid trailer commissions from mutual fund and insurance companies based on the business I do through them.
It's never too early to have an estate plan and it's always recommended to update your estate plan at big events in your life.
Most people start to create an estate plan when they get married or have their first child. At this stage, it's usually very simple. Generally speaking, your assets will transfer to your spouse or children.
As you accumulate assets such as investments, real estate, insurance policies, pension plans, collectibles, etc., they become more complex and require specific planning so that you don't pay large amounts of taxes at death.
It's important to have some sort of estate plan regardless of how many assets you have because you can eliminate most of the probate fees that the government charges your estate at death. You can also potentially save on lawyer and accountant fees that come from your estate as well.
The most common things that makeup an estate when it isn't properly planned for are:
All of these things can avoid additional taxes at death when planned for appropriately.