Retirement Planning Vancouver | Structure Your Estate Planning
Do you know what will happen with your estate once you pass away? Even if you are young and do not have much for assets it is important to plan for what happens when you are no longer here. Leaving your loved ones with the burden is not only overwhelming for them but if things are unclear and unsettled the government could step in and potentially take half of the estate.
If you leave it to your family to figure out, things can get messy and cause a rift between family members. You probably do not want your estate to become a financial and emotional burden to your family. The best time is now when figuring out what is being left for inheritance and for whom. What items will be given away and what items are left owing. How will that all be managed and by whom.
Make a solid plan for the future
These are just some ideas to plan out. If you are unsure or need some guidance Thomas C Chan can help you get started with your estate planning, so nothing is left to chance. He is a trusted financial advisor in Canada who has helped many Canadian families build wealth, plan for retirement, and use insurance to cover their assets as well as build even more wealth. He wants you to not only retire wealthy but leave your family wealth. Your money should outlive you.
To know how to structure your estate and plan for its distribution once you pass away, it is necessary to know the proper terminology. After this it is valuable to understand the timetable of what happens in this event.
The Probate phase
When someone passes away, the next step is the probate phase. This is where the will is verified and determined real according to provincial laws. Depending on the agencies and financial institutions that hold any assets of the deceased person, the will may go into probate. This just means assets are held frozen until it is determined how they should be accessed and distributed. It is recommended that you seek legal advice when in this phase.
In the probate phase debt is cleared, taxes are paid and only after this will assets be distributed to beneficiaries. In the probate phase, you will need to write a cheque to the government. This is a probate fee that is levied by the government based on the value of the estate. In Canada, this fee is 1.5% of the value of the estate and is payable to the court. This phase usually lasts for six to eighteen months but easily could go much longer if there are legal battles going on or any other issues. In that event it could take up to three to four years.
It is important to mention the probate fee is not always exactly 1.5% as it is a little different from province to province. In British Columbia it is 1.4% and that can add up to a lot. The taxes of the deceased can also be costly for the family left behind. The assets are treated as sold and any taxes that are incurred by that status are passed along to the family/beneficiaries. Estate planning is so important because for example if there is an RRSP or RRIF without a spousal rollover available, the CRA will take 50% of this amount left as it is considered income.
Use the estate planning checklist
To make things easier for your family in the event you pass away, use the estate planning checklist provided here. However, keep in mind each province should be treated differently. This checklist will be an overview for Canada. If you need more specific advice please set up a free consultation with Thomas Chan. He is more than happy to sit down with you and get you started using location specific information.
Get a password manager
One of the first and most basic things on the estate planning checklist is collecting your passwords. The best thing is to have all of them in one place either written down or stored in an app like one password.
Next on the checklist is to decide what you want to happen with your social media accounts. Do you want them closed or kept open?
Another checklist item is to store all your tax and insurance documents in one place. Do not lock them in a vault unless you give explicit instructions on how to access them. It is also a good idea to have a list of important contacts along with phone numbers in this same spot.
Having an updated will is important
Your will is the next huge thing to have added to the checklist. This is a document that gives your family instructions to follow upon your death. Make it clear so there is less chance of arguments within the family. You will need to name an executor. This is the person who gathers the beneficiaries and distributes the assets. The executor must be up for the task, because if they make a mistake in their role, the beneficiaries can sue them. The will also include funeral instructions, what happens to the assets as well as guardian choices in the event there are minors or disabled members.
Keep it civil
Having a will is not a magical document that saves everything. After probation, the will becomes a public document so be sure you do not write anything unpleasant in it about any family members. They can read it.
Power of attorney is another key role that you include in your will. If you are unable to make decisions due to sickness or other reasons, the PoA can make them on your behalf. You could also assign someone the role for a temporary period. For example, if you are out of the country, the power of attorney can pay bills and collect payouts as well as make other financial decisions. Always choose someone who cares about you and your wellbeing.
Name your beneficiaries in your checklist for all your assets. If you have insurance it is paid out to the beneficiaries immediately without delay, as opposed to assets. Therefore, insurance is a great way to alleviate any extra burden on your family members until the will is settled.