What is estate planning?

What is estate planning?


What is estate planning?
In simple terms, estate planning
is the process where you lay out your instructions as to how
your assets should be
distributed Who they are to go to, when they are to go
to them and in what form.
And of course, you want to do this in a very
thoughtful way. You want to do it in such a way
that it happens quickly and you
minimize cost and taxes. To some peoples surprise,
nearly everyone has an estate.
Your estate includes all of your assets. For example your
home,maybe a cottage, your bank
accounts, your investment accounts like an RRSP
or a TFSA, a car, your personal
possessions. So in my mind, estate planning is
something that applies
to almost everyone. If you die without a plan, the
government implements one
for you. And if you die without a will,
youre deemed to have died
intestate and each province has their own set of rules
called the Intestacy Rules as to
how your assets will be distributed. Generally speaking,
your spouse will get a
preferential share. Take the situation married couple but
theyve split and its a very
acrimonious split. They dont have a formal separation
agreement.If one of them passes
away without a will, the intestacy rules will state that
their assets will go to that
surviving spouse and that might be the last person they want
to get their assets. On the
other hand, many provinces dont recognize common-law
spouses so if you dont have
a will, your common-law partner could be shut out.
Another common problem
relates to minor children. When they are entitled to a
share, oftentimes their share
is paid into court even if there is a surviving parent
and the court will administer
the funds. Furthermore, when they reach the age of majority,
they will be entitled to the
full estate. In either scenario I dont think its what most
people would have wanted. In addition, you’ve forgone
the ability to name your
executors or liquidators in Québec, the
ability to express your
desire who you want to be the guardians of your children
and to engage in tax planning.
And without proper tax planning, you can significantly
reduce the value that your loved
ones will receive upon your passing. Strategies like rolling
over assets to your spouse on
a tax deferred basis, the use of multiple wills or trusts or
making charitable donations can
have a significant tax savings for your estate and again
maximizethe value that you
leave to that next generation.So in conclusion, I hope you will
agree with me that estate
planning is very important and like most things in life that
are important, its never too
early to plan.

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