A shocking number of Canadians, more than half, don’t have a will; the cornerstone of an estate plan.
Estate plans are not just for the wealthy.
Estate plans are for anyone who wants to ensure that any asset including their home, savings, investments, and life insurance go to the people they care most about. Estate plans can also ensure that your children are looked after by the people you want to raise them if you die while they’re minors, and can be used to designate someone as a power of attorney.
These are just a few examples of what an estate plan can do, and why everyone should have an estate plan.
What’s Included In An Estate Plan?
According to the Investor Education Fund (an Ontario Securities Commission initiative), an estate plan can include:
A will is a legal document that sets out how your assets are to be taken care of after your death. If you die without a will, the law decides how and who will receive your assets regardless of your wishes or the needs of your family. That is why a will is so important.
- For parents, you’ll need to designate a guardian to care for your children. Some people opt to do this through a will and/or a separate guardianship document (which is often done at the same time as the will.) In either case, a lawyer should review it to ensure the wording is clear and completed without issue.
Power of attorney
Power of attorney is a legal arrangement where you give someone the authority to make property, financial and health care decisions on your behalf if you are not able to make your own. There are several types of power of attorney to choose from with varying levels of decision-making capabilities.
As part of a power of attorney for health care, many people write up what’s commonly called a living will. A living will details what you want and don't want your doctor to do if you’re not able to express your own wishes. Typically a living details end-of-life health care.
Life insurance provides a tax-free cash payment to your beneficiaries upon your death. Depending on who you name as your beneficiary, it can offset the loss of your income into the family coffers, help pay off debts or cover final expenses like funeral costs.
- Related VIDEO: Ask The Expert – Five Life Insurance Questions Answered
A trust is created to hold property or assets for a beneficiary (someone who will get the proceeds of the trust). It is managed by a person called a trustee. There are many reasons for setting up a trust upon your death, but some common examples include: you want to ensure a disabled spouse or child has the means to maintain their care; your surviving spouse needs help with long-term money management; or you have children from a previous marriage who you want to inherit assets, but only after your estate provides for your current spouse’s lifetime.
Estate Planning in Canada - Your Estate Matters!
Some surveys have suggested that only 30 per cent of Canadians have a formal estate plan; not surprising given that more than half of us don’t even have a will. Whatever the reason, the reality is that everyone needs an estate plan; a will, life insurance, and everything else you need to ensure your family is taken care of. An estate plan is the single, most effective way to bequeath what’s yours efficiently, tax-effectively, and according to your wishes. It’s not something you do for yourself, but rather for your loved ones.