You probably associate the term “estate planning” with a certain age, when it should be considered at any age and in all aspects of your financial planning. Everyone—regardless of age, wealth, and family situation—can benefit from some degree of estate planning, and having a plan in place can help ensure your goals and wishes are carried out.

So where do you start? Here’s a quick roadmap to planning you can and should be doing right now.

 

Step 1: Will & Powers of Attorney

While you may think you don’t have assets or dependents warranting a Will, it does much more than simply designate who gets what. Powers of Attorney for Medical and Property outline your wishes while you’re still alive and unable to make decisions for yourself. Who will be responsible for your finances, to ensure that your finances can be accessed if you’re incapacitated? Who will be making medical decisions on your behalf in those same circumstances, especially if you have no nearby next of kin? If you’re incapacitated and don’t have these documents in place, someone would have to apply to the courts for access which could be time-consuming and costly.

If you’re at the stage of having dependents and assets, a Will and Powers of Attorney are even more important. If both parents were to pass in the same event (which can happen more frequently than you may think), without a legal guardian for any dependent children named in the Will, the court would be deciding who takes custody, which could be a difficult and time-consuming process for a grieving family.

While lawyer-prepared documents are best, something is better than nothing. For simple estate needs, check out willful.co, a Canadian online Will service. Your signature would need to be notarized, providing further credibility to the document in court.

PRO TIP: Understand the role of a Executor when asking someone to take that responsibility. In 2015, the Canadian government placed more responsibility on Executors for accurate estate valuation and more detailed reporting. Learn more here.

 

Step 2: Designate Beneficiaries on Investments

As soon as you start investing, you should ensure that appropriate beneficiaries are assigned. In some cases, such as segregated funds, the investments would bypass probate and be paid directly to the beneficiary. This simplifies the estate settling for the Executor and ensures funds are released in a timely fashion. When things change, make sure you adjust your beneficiaries, especially after a marriage breakdown or the death of a loved one.

 

Step 3: Ensure your Insurance Protection is Sufficient

With every life stage, you want to ensure that life insurance, disability, and critical illness insurance benefits satisfy your changing needs. While disability and critical illness insurance are living benefits, having these types of coverage protects your other assets such as your investments, retirement savings, and your home.

Life insurance can be so much more than just providing payment of the mortgage and future needs for your dependents. Later in life, life insurance can continue to play a role in leaving a legacy to loved ones or satisfying the capital gains tax bill on a family cottage or investment property being passed to the next generation. Instead of worrying about leaving retirement assets to your children or grandchildren, use life insurance to have a guaranteed transfer of wealth and enjoy your retirement.

 

Step 4: Consider any Special Circumstances

We’re all unique, and your estate planning should reflect any special circumstances in your life. This may include, but is not limited to:

• disabled dependent needs: you may have an RDSP to consider, and need to set up a trust as part of your estate planning
• blended families: in the event of divorce and remarriage, having children with more than one partner, or step-children, there may be additional planning in order for all divorce agreement considerations and family needs to be addressed
• corporation: incorporated business owners will have further estate needs regarding their shares in the corporation. In the event of multiple shareholders, a buy/sell agreement and funding may also be required.
• unique tax situation: for many Canadians, a snowbird lifestyle becomes their reality later in life. Your estate planning needs to consider not only Canadian tax and estate needs, but also the other country where assets may be held

 

 

Your Part in Others’ Estate Planning

It can be easy to avoid these conversations with parents and other loved ones, but if you’re likely the one who’ll be settling an aging parent’s estate, have a conversation about what they have and what they’ve done in estate planning to make your job as Executor much easier. Get their advisor information, ask to see statements or work with them to create an end-of-life book outlining everything you need to know. While it may not be customary or comfortable for you to talk about money and death with your parents, if they’re over the age of retirement you should begin having those conversations.

 

Need some help? I’m happy to coordinate some estate planning with you and your loved ones.