You may not believe it, but everyone has an estate. All of your possessions make up your estate, including your vehicles, real estate, banking accounts, all investments and life insurance policies plus any of the other of the myriad of things you own from the couch in your living room to your favourite pair of shoes. No matter how small or large the estate is, it is prudent for everyone to put together an estate plan.
Essentially an estate planner helps you with your estate planning. Estate planning simply means making a plan ahead of time and naming the individuals you want to receive the things you own after you pass away.
Why Estate Planning is Important
Having a plan ensures that your assets are transferred to your loved ones in a simple, tax-efficient and organized manner. The benefits of estate planning include:
- Making sure your assets are passed on to the beneficiaries of your choice. If you die without an estate plan, it will be up to the government to decide how your estate will divided up.
- Improving the speed and efficiency of the transfer of your estate to your beneficiaries.
- Determining how your assets are owned, organized, and managed while you are still alive. Circumstances can arise that prevent you from making your own decisions. Enduring powers of attorney, personal directives and trusts are all excellent tools to help others manage your estate in the event that you are not able to do so yourself.
- Minimizing your income taxes at death. An estate plan helps transfer the ownership of property and minimize the taxes incurred by both your estate and your beneficiaries.
- Minimizing your costs and fees at death. There are costs associated with dying such as probate fees and funeral expenses. Planning ahead takes the burden off your family after you pass away.
What Good Estate Planning Does
The most obvious benefit of estate planning is making sure you have control over who the beneficiaries of your estate are and what they receive. However, an estate plan done up properly includes other provisions, including:
- Provide instructions for your care if you become disabled before you die.
- Name a guardian for your minor children.
- Provide for disabled family members without disrupting government benefits.
- Provide for financially irresponsible family members or those who may require future protection from creditors or divorce.
- Include life insurance in order to provide for your family.
- Provide disability income if you unable to work due to illness or injury.
- Provide the financial means to pay for long-term care if you require it at some point in the future.
- Allows for the efficient transfer of your business at the time of your retirement, disability, or death.
- Minimizes taxes, court costs, and other legal fees.
- Name an executor of your own choosing to oversee the terms of your will.
- Set up funeral arrangements.
For an estate plan to be truly effective, it needs to be reviewed on a yearly basis. Circumstances change, and you need to ensure that your plans for your estate reflect those changes.
If you do not know where to start, then it is time to consult an estate planner to help you through the process.