Estate planning: have it your way - now and later

Do you own a home? Have a spouse, partner or children? What about an estate plan? Do you need one? Only if you want a say in how things will continue without you. “Estate planning is about life,” says Chartered Accountant Prem Malik, Investment Adviser with Queensbury Securities Inc. in Toronto. “It lets you put the pieces of your own personal puzzle together so that the picture comes out the way you want it – not the way the courts, the lawyers or even your family members want it.”

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“It’s about much more than money and things,” says Jamie Golombek CA, CPA, CFP, CLU, TEP; Managing Director, Tax & Estate Planning for CIBC Private Wealth Management, in Toronto. “An estate plan is a way to communicate the important decisions we make in our lives. Who do we trust to decide about our health and care if we’re unable to do it for ourselves? To whom do we entrust the care of our children? Who do we want to be responsible for following our instructions after we pass away?” Both Malik and Golombek agree that every estate plan should address certain common issues. The advice of a lawyer is a must, and depending on the size and complexity of your estate, you should consult a Chartered Accountant who specializes in taxation and a financial advisor who knows what your assets are. “Estate planning is private and personal. Get an objective third party,” cautions Malik. “This is one time when you don’t want that family member who happens to be a lawyer.” A will and power of attorney (POA) should be your first priorities. Pay the money and get them done right. It is well worth what a lawyer will charge to produce simple versions of these documents, Malik says. “If you have a will, you have choice and can make a plan. Otherwise, the government will do it for you,” says Golombek. “Basic rules specify minimum entitlements for your spouse and kids when you die. Spouses who are left nothing can challenge or contest the will. “Absent the legal rules, you want to specify how your assets will be divided,” he continues. “Identify any charities you want to bequeath assets to, or other relatives to whom you want things to go. Advisors can show you how to set up trusts to protect your property and reduce taxes, both upon death and potentially, for future beneficiaries.” “Document and put together a net worth statement,” advises Malik. “Include your house, cash and RRSPs, less your bills, car loans, and so forth. It should reflect how everything would look if you died tomorrow. The bigger your net worth is, the more you need to plan for taxes. Revisit your estate plan regularly. Update it whenever your family or financial situation changes.” “Life insurance may also play an important role in estate planning,” adds Golombek. “If you’re a breadwinner and your family is young, you need it to cover the risk of premature death. Insurance can provide income replacement for your family, cover off capital gains tax on assets or properties, pay probate fees and even be used for charitable giving.” “Consider it emotional motivation,” Malik says. “Insurance provides security that lessens stress on your family during a difficult time. In the matter of a few weeks, there’s cash in hand to pay off expenses. It’s a beautiful tool for buying peace of mind.”