Today’s topic is estate planning.
I have a few exciting things you need to consider … well maybe they’re not that exciting! I know the last thing anyone wants to think about is their own death and how to plan for it … I know I don’t. However, the unfortunate truth is that one day, we will all face that reality.
The responsible thing to do is put your feelings (or fear) of death aside for a minute and consider a checklist of things to review for your estate. So let’s start with perhaps the most obvious: having a will. Do you have one? If you don’t and you’re thinking you don’t need one, then let me convince you otherwise. If you pass away today without a will, your assets will be divided according to B.C. law and the cost to administer your estate will be much higher than if you had one. Plus, it will take double the time and effort for the appointed executor to finalize all the details of your estate. You can save them time and a headache by having a will. If you have children, then you shouldn’t wait to get a will, otherwise you will lose the right to appoint a guardian for them, unless you’re okay with Lady Tremaine (Cinderella’s stepmother) being appointed as guardian!
Now, even if you have a will, it’s important to revise it periodically when material changes happen in your life. For example: getting married or divorced, having children, or acquiring new assets that were excluded from the last will. Creating or updating a will is not always expensive, especially if your situation is straightforward. Notaries are often qualified to take care of estate planning needs and can be less expensive than lawyers, for specialized wills and complex situations, consider seeing an estate lawyer.
If you are in the process of getting a will, then you might also consider getting a power of attorney document as well. This legal document gives a person the authority to manage your financial affairs on your behalf. There are two main types of powers of attorney, but the one I often talk to clients about is an enduring power of attorney. This is the person (i.e. your attorney) who manages your finances when you become mentally incapable of doing it yourself. Surviving a major illness or dementia can often leave you mentally incapable of managing your finances and assets. I often tell my clients in retirement that they should already have this document in place, no ifs, ands, or buts! If you have a spouse, then you should have legal POA over each other.
Let’s move on to the next item on our estate checklist – your registered assets. It’s a short checklist today and we’re almost done, so sit tight! If you have an RRSP or TFSA, you have the option of leaving your assets to a beneficiary or to your estate (i.e. your will). If you want to simplify your estate, name beneficiaries on all your registered accounts. You’ll save on probate fees. Contingent beneficiaries are also a good idea to have. For example, if you and your spouse are each other’s beneficiary on all your registered assets, having your children as secondary beneficiaries is a good idea. While it’s unlikely that you and your spouse will pass away at the exact same time, it’s still possible, and planning for it is never a bad idea.
Estate planning is usually far more complicated than this short checklist. However, the information presented above provides you with a few items that might need to be considered to prepare you for the inevitable.
Lori Pinkowski is a senior portfolio manager and senior vice-president, Private Client Group, at Raymond James Ltd., a member of the Canadian Investor Protection Fund. This is for informational purposes only and does not necessarily reflect the opinions of Raymond James. Lori can answer any questions at 604-915-LORI or [email protected]. You can also listen to her every Monday morning on CKNW at 8:40 a.m.
