Estate Planning

About estate planning:

When one talks of estate planning, it refers to the process of disposing of one’s estate in the best way possible. During estate planning, the estate owner aims at disposing the estate wherein the estate passes on to beneficiaries designated by the estate owner. Another benefit of estate planning is that through right estate planning one gets to pay the least amount of taxes.

Designate appropriate guardians for minors through estate planning:

Another point all estate owners keep in mind during estate planning is to provide for, and to designate appropriate guardians for minor children. These estate owners also aim at planning in case of incapacity during estate planning. The first thing that has to be done in estate planning is to draw up a will. This is because without a will, or dying interstate, only eliminates one’s control over the family’s assets and in the process, adds stress to the family.

When one intends to estate plan, it proves to be better to plan and discuss with the family or a professional advisor on the distribution of the estate. There is no point or any benefit in hiding things, and in keeping everyone in the dark till the end of the making of the will. This way, you can get a rough idea on how the family members react on the receipt of your assets and their capacity in handling things.

Place important documents in a safe place:

It is important to place all valuable papers like wills, bonds, birth certificates, insurance policies, marriage certificates and social insurance numbers in a safe place. Place it somewhere your family members will reach easily. It is of no point just keeping your insurance policy safe; you have to review it periodically, and keep it up to date. The reason one should have an insurance policy is because it is the best means of creating the necessary cash for bills at one’s death, and to provide some income to the family members.

However, with an insurance policy, it is important to have a beneficiary who receives the money on your death. This is because if you name your estate, it only slows down the process of receiving of money by family members. Money going to the estate also increases the fees you have to pay to the executor, and in the process, may make the proceeds end up to the wrong people.

It is always preferable to leave your property and investments as ‘joint with rights of survivorship’. With this preference, the ownership of the property and investments can be done with the least cost, time delay and ‘red tape’. To reduce a big tax bill, it would be better for you to name a beneficiary, preferably spousal beneficiary, in your RRSP or RRIF. You could also add an RRSP-RRIF clause in your will to reduce tax as the total value of this clause is always taxed at a high rate.

Keep some liquid assets to provide for bills:

To provide for money to pay bills on death, and avoid forced sales of assets, it is always better to keep some liquid assets. Make it a habit of filling out Net Worth Statements every year where you show a detailed list of your assets, its locality and current value. Having an income statement with current income sources and the type of income and continual amounts after death also proves to be beneficial.