Schmidt Azam Wealth Management - ScotiaMcLeod Scarborough - Estate Planning

By: Azam Wealth Management - ScotiaMcLeod Scarborough  09-12-2011
Keywords: Life Insurance, Estate Planning

For some, estate planning is difficult to think about, let alone engage in. While we understand the vital importance of getting our finances and legal affairs in order for our heirs, few of us make the time. It’s easy to put off — and besides, the term “estate planning” can conjure up notions of greater wealth than we feel we possess. But all of us will have an estate to pass on, and want our cherished beneficiaries — be they family or a favourite charity — to receive their inheritance according to our own intentions.

Estate Planning is a Process

Estate planning is more than simply preparing a Will. It begins with reviewing your current situation by listing both assets and liabilities. Assets include such things as your residence, investments and life insurance. Examples of liabilities are your mortgage, taxes due at death and funeral expenses. You should also review your Will and powers of attorney (a Mandate in Quebec), both of which need to be current and easy to understand for your wishes to be clear and carried out properly.

A Will can become outdated over time, so check at least every three years that it conforms to your current situation or, after a major family event such as marriage or birth of a child. If you don’t have a power of attorney, consider having one prepared. If you become mentally or physically incapacitated, your Will does not apply, and only a pre-arranged power of attorney can guarantee someone you trust will be able to act on your behalf in overseeing your affairs.

The next step is to determine your goals and objectives for your estate. In some cases, tax planning will be a priority. In others, the timing of income to beneficiaries is essential. It’s helpful to walk through the possibilities with expert advice, develop priorities, and identify any gaps between your current situation and your ultimate goals.

Filling the Gaps

For many, life insurance is a useful way to fill any gaps. Younger individuals without significant assets can use life insurance to create an estate that will provide their beneficiaries with security.

Older individuals who have already accumulated other assets can use life insurance to help preserve the value of their estate. Often, taking the first step to prepare an estate plan is the most difficult. But once you get started, you’ll find it’s not as hard as you expected.

While there are several ways to ensure your estate goals are accomplished, two are considered cornerstones of estate planning and should be prepared by everyone. These are having a properly executed and current Will and appointing a power of attorney.

Wills

Many people delay writing their Will under the assumption that being young, or in good health or without dependants, justifies waiting. However, if your assumption is wrong, your beneficiaries will get what the province mandates. In addition, the absence of a prepared Will invariably causes delays and extra expense for surviving loved ones.

Beneficiaries

Careful consideration should be given to the value of your estate and those people you wish to benefit from it. Questions that should be considered are who should receive what, and under what circumstances. For example, should money be held in trust for a child until a certain age is reached?

Choosing an Executor

Your executor is responsible for administering your estate according to the wishes in your Will. Not only should you choose a primary executor, but also an alternate (a contingent) if you are concerned whether an individual you may wish to appoint would be up to the task. You can also consider naming a corporate executor, such as Scotiatrust, to undertake this role for you.

The duties of an executor are many and complex, and the emotional strain can be high, so choose this person carefully. Letting them clearly know your wishes will give you peace of mind, and will allow them to act decisively during a potentially unsettling time.

Powers of Attorney

A power of attorney (Mandate in Quebec) gives someone the authority to manage and govern your property and financial affairs while you are still living if you become incapable of doing so. There are also powers of attorney for personal care governing health and other life decisions. Everyone should have both. You will need to complete a legal document to appoint a power of attorney.
There are different roles a power of attorney can take on, over a limited period of time (i.e. during your absence on vacation) or in more enduring situations and with broader control (i.e. managing all of your financial affairs if you are somehow incapacitated).

Whatever stage of life you are at, Wills and powers of attorney are two cornerstones of prudent estate planning. They can help ensure that your worldly assets are properly cared for, and that the most important people in your life are properly considered at an important time. However, Wills and powers of attorney are also potentially complex legal documents that require the advice of specific professionals to implement properly.


Cornerstones of estate planning.
While there are several ways to ensure your estate goals are accomplished, two are considered cornerstones of estate planning and should be prepared by everyone. These are having a properly executed and current Will and appointing a power of attorney.

Wills

Many people delay writing their Will under the assumption that being young, or in good health or without dependants, justifies waiting. However, if your assumption is wrong, your beneficiaries will get what the province mandates. In addition, the absence of a prepared Will invariably causes delays and extra expense for surviving loved ones.

Beneficiaries

Careful consideration should be given to the value of your estate and those people you wish to benefit from it. Questions that should be considered are who should receive what, and under what circumstances. For example, should money be held in trust for a child until a certain age is reached?

Choosing an executor

Your executor is responsible for administering your estate according to the wishes in your Will. Not only should you choose a primary executor, but also an alternate (a contingent) if you are concerned whether an individual you may wish to appoint would be up to the task. You can also consider naming a corporate executor, such as Scotiatrust, to undertake this role for you.

The duties of an executor are many and complex, and the emotional strain can be high, so choose this person carefully. Letting them clearly know your wishes will give you peace of mind, and will allow them to act decisively during a potentially unsettling time.

Powers of attorney

A power of attorney (Mandate in Quebec) gives someone the authority to manage and govern your property and financial affairs while you are still living if you become incapable of doing so. There are also powers of attorney for personal care governing health and other life decisions. Everyone should have both. You will need to complete a legal document to appoint a power of attorney.

There are different roles a power of attorney can take on, over a limited period of time (i.e. during your absence on vacation) or in more enduring situations and with broader control (i.e. managing all of your financial affairs if you are somehow incapacitated).

Whatever stage of life you are at, Wills and powers of attorney are two cornerstones of prudent estate planning. They can help ensure that your worldly assets are properly cared for, and that the most important people in your life are properly considered at an important time. However, Wills and powers of attorney are also potentially complex legal documents that require the advice of specific professionals to implement properly.

A ScotiaMcLeod advisor has the knowledge, resources and team of experts to help you understand your options, and take action that gives you and your loved ones greater peace of mind.

Additional Information Booklets:

  • Estate Planning Handbook.
  • Dying Intestate. (without a will)
  • Drafting Your Will.
  • Duties & Responsibilities of an Executor.
  • Testament.

Note: The above article is for information purposes only and should not be construed as offering tax advice. Individuals should consult with their personal tax advisors before taking any action based upon the information in this article. TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF.

Keywords: Estate Planning, Life Insurance

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