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Estate Planning

Estate planning is as important a consideration as is retirement planning. It simply involves organizing your affairs so that upon your death, your heirs are easily able to get the money you've left them - and at the lowest possible tax cost. It is a means of giving your loved ones control over your estate in order to make the most of its value.

Correctly structured, your estate plan should ensure the following:

  • that no one will have to guess at your wishes, since your intentions will be fully documented
  • that your spouse, children or other beneficiaries will be assured some consistency in standard of living
  • that your capital is protected - income tax, capital gains tax, and probate fees etc. will be minimized
  • that your business, if you own one, continues to survive and prosper, whether it is passed on to your children, or sold to someone else

Wills and Estates

The importance of a will cannot be underestimated, since it is the only way you can guarantee that your estate plan will be executed precisely and according to what you had intended. This cornerstone of your plan sets out your wishes, most particularly with regard to the distribution or disposition of your assets.

  • Of Canadians over the age of 50, 29% do not have an up-to-date will

If you have no will (which means that you die intestate), the provincial government will decide how to give away your property - and it is not likely that this will happen in a manner you would have chosen. It also means your heirs may be liable for more taxes on your assets, and it may leave your spouse or children unprotected.

A will is a document of great importance and should cover the following:

  • a statement that clearly explains that any previous wills are cancelled by the creation of this new one
  • the naming of an executor, the person who will be responsible for managing your estate
  • instructions to the executor to give anyone to whom you've decided to leave your assets anything left in the estate once all claims and taxes have been settled
  • the custodial arrangements for any children under age 18
  • specifics about special gifts you may wish to make - for example, a bequest to a favourite charity.

Finanacial Planning

Financial planning requires some motivation. And for many people, it requires some guidance. Many people are simply not interested in personal finances and may not even have a household budget in place. Many feel that they have insufficient assets to consider developing a plan, or that they are too young or too old to do it. And still others may not want to deal with issues like estate planning.

But without a financial plan ...

  • you cannot protect yourself against emergency cash flow problems
  • you are unlikely to have money available for investment purposes
  • your lifestyle at retirement may be greatly compromised
  • poor tax planning can create a scenario in which you pay much higher taxes than necessary

Financial planning covers all of the issues we've discussed here - investment planning, retirement planning, and estate planning, as well as cash management - something that makes all of these other issues possible. Financial planning may also involve insurance considerations and income tax planning.

It can be thought of as a problem-solving process that allows you to achieve your financial goals - and like many other facets of life, it requires you to make choices. You need to determine your short-term and long-term goals and priorities, and work at developing strategies that will help you meet them. If you find this too daunting a task to handle on your own, you may wish to consider meeting with a financial planner, who can either give you enough basic tips to get you started on your own, or who can act as a long-term counselor.