We've all heard the saying: "You can't take it with you."
Most people believe that estate planning is only necessary for wealthy people. This misconception is likely the reason that 51% of Canadians have died without a will in recent years. No one wants to contemplate their own mortality and imagine life and the world carrying on without them. However, if you don't, there is a huge price that is paid by all family members who survive you.
Truth be told, estate planning is planning for the living. It is the most loving thing you can do for your family. It will create a lasting impression and frames how you will be remembered.
Every one of us needs to do some estate planning.
In its simplest form, estate planning involves creating your last testament and will. In your will, you will appoint your executor, someone who will act on your behalf and follow your directions in dealing with settling of your estate. In the absence of your will's written directions, the provincial courts will step in and eventually appoint someone to act on your behalf. All assets will be frozen while things get sorted out. The intestate process of your provincial legislation will prescribe how your estate will be distributed. It will be likely that your estate will be distributed differently than you wanted. And, it's guaranteed that there will be additional work, delay and far greater expense born by your estate.
Most people feel that estate planning is too complicated or expensive, and that's just not true. We should all have a will at the very minimum and there are many options available, from the simple to the complex. Our financial planners work with clients to determine their estate planning needs and help ensure all necessary elements are completed to fulfill your wishes.
Who will you disinherit?
Proper estate planning is important and creating your legacy involves much more than just focusing on minimizing taxes.
The reality of what happens when you are gone is this: Your assets will potentially go to the following 3 heirs:
- Your family & friends
- Charity of your choice
- Canada Revenue Agency (CRA)
Under your existing plan, how much of your accumulated life's wealth is going to CRA and why?
Do you know the exact dollar amount? (hint: it's much more than you think.)
Do you think that CRA and Provincial Governments deserve a bonus on your final tax return for the good work they have done for you over the years? It is doubtful that you feel this way.
If you could, wouldn't you want to leave as much as possible to family and friends? By voluntarily including charity in your plan in a very specific way, you can virtually disinherit CRA, thereby maximizing what will go to your heirs and create your legacy.
Furthermore, through estate planning, you can then exercise control over the distribution of your assets and determine how often, when (at what age), how much and what's required for your heirs to receive their inheritance.
Estate planning isn't about dying, it's about control and execution of your final wishes. It's about whether you're going to endow somebody else's (the government's) values by involuntarily sending your assets through the probate and tax system or take charge and endow your own values through careful planning that will directly fund the people, causes and institutions you deeply care about. The choice is yours to make.
It is our belief that it makes sense to know IN ADVANCE with absolute confidence what will happen to your wealth once you're gone. The truth is you can't take it with you, but you can control what happens after you are gone.
Knowledge is power that can change the world. Live your best life and create your legacy on purpose.