5 Things Your Estate Plan Should Include

CSR Wealth Management |

Wondering what an estate plan should include? Here’s a checklist of items you should have in your estate plan and things you need to do.

If you have not read our blog post yet, Do I Need an Estate Plan? I encourage you to do so. It is a short read but paints a really good picture of who needs an estate plan and most importantly, why. You will find out that you’re not too young to have an estate plan, it does not need to be expensive and there are plenty of good reasons you should have one.

5 Things Your Estate Plan Should Include

1. Last will and testament
2. Power of Attorney for Property
3. Power of Attorney for Personal Care
4. Named beneficiaries on investments
5. Financial review

Last Will and Testament

This document names an executor(s) of your choosing to handle all your affairs and to ensure your assets are distributed exactly as you intended them to be distributed.  If you have children, you can make a provision for who their guardian should be, if needed.

Most importantly, this document allows your loved ones to avoid having to apply to the courts for permission to look after your assets, which can take time and can cause much undue stress. It also avoids arguments between family and friends who might all want to play a role.

Power of Attorney for Property

This document allows you to assign someone you trust to make financial decisions for you while you are still living but not able to, whether this be temporary or permanent.  You can be specific about how you would like things handled and that person is legally obligated to follow your instructions.

If you do not have this document, you are leaving it up to the courts to assign someone to do this on your behalf.  Consider that the courts do not know how trustworthy the chosen person is. Moreover, even the most trustworthy person may feel uneasy about making decisions without your direction, putting them in a very uncomfortable position.

Power of Attorney for Personal Care

This document allows you to assign someone you trust to make health care decisions for you while you are still living but not able to make them yourself, whether this be temporary or permanent.  You can be specific about how you would like things handled and that person is legally obligated to follow your instructions.

If you do not have this document, a family or friend can apply to the courts to make these decisions for you. Without any direction from you, they will be forced to make decisions you may not agree with, which is not ideal for you and can be emotionally difficult for them.

Named Beneficiaries on Registered Investments

All your registered investments such as a pension plan, RRSP, LIRA, TFSA and RESP should have named beneficiaries. This does not cost anything to do and is something you should review annually, as circumstances change and as such, beneficiaries may need to be updated.

Registered investments without a named beneficiary get rolled into your estate and are taxed accordingly, potentially leaving your partner, children and grandchildren with much less money.

Financial Review

This refers to reviewing your assets to ensure they are set up to be distributed as intended, with minimal taxes and if applicable, that loved ones will be able to carry on financially without you.

Some of the common things we consider in this type of review are:

  • Named beneficiaries make sense from a tax perspective.
  • Assets are set up to be split amongst your beneficiaries as your Will intends. Often tax implications are not considered when naming beneficiaries and one beneficiary gets more than the other, despite you wanting it to be split evenly.
  • TFSAs to avoid probate tax.
  • Cottage inheritances to minimize capital gains and probate tax.
  • Smooth rollover of plans to a partner to defer taxes.
  • Trustee for RESP to avoid loss of government grant.
  • Life insurance to ensure loves ones will be looked after financially.

An Estate Plan is a Gift

When it comes to finances, I have seen so many money mistakes over the years that could have easily been avoided with a simple discussion and a few changes, many of which cost nothing to do.
From understanding the incredible power of a Tax-Free Savings Account (TFSA) in estate planning to naming a beneficiary or trustee, these things can make a big difference in how much tax your estate pays and how much your loved ones inherit.

An estate plan is simple, affordable and the kindest thing you can do for the people you love.