Estate Planning 101

Estate Planning 101

People spend a lifetime accumulating assets and building an estate with the intention of passing it on to their heirs or charitable beneficiaries. Without proper planning, a person’s death can create significant hardships on the people for which the estate was created.

For an estate to be passed on to the heirs, there could be settlement costs, such as probate fees and terminal taxes. In some cases, where the terminal taxes are substantial, assets may have to be liquidated in order to pay them. Also, the actual transfer of assets could be delayed by probate proceedings that are bogged down if there are any contestable assets.

A sound estate plan can eliminate many of these problems that could arise during the settlement of an estate and may help you accomplish the following:

  1. Ensure that your wishes are honoured when you are unable to manage your own affairs.
  2. Communicate your wishes and expectations precisely to your family and heirs.
  3. Provide for your family’s financial security.
  4. Provide capital to meet immediate liquidity needs for settlement costs.
  5. Facilitate the timely distribution of assets by avoiding probate proceedings.
  6. Maximize the estate for transfer by minimizing taxes and expenses.
  7. Ensure that all beneficiaries are named in accordance with the most recent will or avoid publicity by keeping the proceedings out of the public record.
  8. Conserve the estate so later generations can benefit.
  9. Leave a charitable legacy with a gift of assets or a trust.

Basic Estate Planning Arrangements

One of the primary objectives of an estate plan is to ensure that your assets are transferred in accordance with your wishes. A qualified Wills & Estates lawyer can help you determine which estate planning arrangement will work best for you.

Will

A will is a legal document drafted in accordance with provincial laws wherein the estate beneficiaries are named. A will is subject to probate which means that all assets are distributed under the supervision of the court. An executor is named in the will and is responsible for ensuring that the provisions of the will are followed. Absent a will, the province becomes the executor of the estate and will name guardians and beneficiaries according to its laws.

Trust

A trust is a form of ownership that is set up by the estate owner to receive and hold title of the assets prior to their distribution to the heirs. A trustee is designated to manage the trust in accordance with its provisions. There are several different kinds of trusts, each designed to serve a specific purpose such as to avoid probate, minimize estate taxes, or manage the assets of the estate.

Titling Assets

There are several ways to title assets that will result in different methods of asset transfer. A common form of asset title is Joint Tenancy which allows the asset to transfer, automatically and without probate, to the person named jointly in the title.

Contractual Transfer

Assets such as life insurance and Registered Retirement Savings Plans transfer by contract to named beneficiaries outside of probate.

Estate Planning Guidance

In many cases, a simple will can suffice as a way to ensure the desired transfer of assets and guardianship of children. Estates of a larger size or that contain illiquid assets such as real estate, may require the guidance of a qualified lawyer to structure the most appropriate planning arrangement. An estate planning lawyer can also arrange your estate in a way that can eliminate any potential friction among heirs. If the estate is of a significant size that might subject it to terminal taxes, then an accountant or tax lawyer can suggest arrangements that will minimize them.

Estate tax laws change periodically as do the individual’s financial situation which can make an estate plan obsolete if it is not reviewed periodically. A good estate planning team, consisting of a lawyer, a trust administrator, a life insurance agent and an investment advisor representative, can provide the necessary guidance to ensure that your estate plan is current and operable.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2021 Advisor Websites.

Mutual funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc. The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This content was prepared by Jed Levene who is an Investment Funds Advisor at Rockwater Wealth Management a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this presentation comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.

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