Despite the importance of estate planning, many Canadians find reasons to put the process off, with research having shown that only around half of all Canadians actually have a functioning, legal will.
If you’ve been waiting for the right moment to start estate planning, this article will hopefully show you that there is no ‘right moment’ and that the most important thing is to take the 5 steps outlined below at the very earliest:
1. Write a will.
This is the most commonly delayed step in the estate planning process, and yet if you die without a will in place, someone else decides who gets what of anything that you own. Family members have no say in the proceedings, and in some provinces, even common-law partners have no automatic right to inheritance, even if you’ve been together for decades.
Most Canadians certainly don’t want that to happen, and yet without a will, that’s exactly what will happen.
2. Update beneficiary designations.
If you’ve named someone as a beneficiary on a registered account or life insurance policy, that’s exactly who the account will be passed to in the event of your death. Now if you’ve kept your accounts updated, this is great, but if you haven’t, this could be disastrous.
Ultimately, any major life event, such as the birth of a child, divorce, or remarriage, warrants a review of account listings, and an estate lawyer can help you with this.
3. Plan for an unexpected tax bill.
Although it is technically true that there is no inheritance tax in Canada, in the event of your death, the CRA will treat you as having sold any capital property you own at fair market price right before your death. This can trigger a substantial capital gains bill, while your remaining RRIF or RRSP gets taxed as income, unless it is rolled over to a spouse or a child or grandchild who is financially dependent.
4. Sign your powers of attorney.
Wills only come into effect once you die. If while alive, you become incapacitated, you’ll need a power of attorney for your property and finances and another for your personal and medical care. If you fail to nominate powers of attorney, your family might be forced to make an application to the courts so that they can pay your bills or make decisions based around your care.
5. Communicate your plans with your family and loved ones.
Surveys have shown that a high percentage of Canadians who are married have never talked about their end-of-life wishes with anyone, let alone their spouse or close family members. It’s essential that when you’ve planned your affairs with help from an estate lawyer in Edmonton, you tell your executor where the paperwork for your will is kept and list your accounts, digital assets, and insurance policies where they can easily be found by those who need them.
You may find it an easier conversation to have with your loved ones if you think of estate planning as a way of ensuring that they are provided for as you would wish in the event of your death, rather than about your death itself. But however you choose to look at it, estate planning is simply a series of steps that, with professional guidance, can be carried out efficiently and with minimum stress. So what are you waiting for?
