The effective management of your money and assets is part of everyday life, but it is also essential to achieve all kinds of goals. For example, long-term goals can include protecting your inheritance and moving your assets smoothly over to your loved ones.
Estate planning is both a fiscal year and an emotional exercise. We do not know what the future holds, but one thing is certain: a person’s death always has tax consequences. To maximize the assets you want to leave to your heirs and minimize the taxes your estate must pay, consider putting a plan in place to ensure that your estate is distributed to your loved ones as you wish.
During your lifetime, you have accumulated cash (business, car, savings book, shares, life insurance, etc.) and real estate (family home, second home) and you want to transfer them to your heirs under the best possible conditions, Here are some steps that can help you create an effective estate plan:
1.Start a discussion with your family members
For many people, this is the hardest part of estate planning. However, this is also the most important aspect. Here are some questions to ask:
If you appoint a member of your family to be the administrator (liquidator, in Quebec) of your estate, is he prepared to assume this responsibility?
Who will be your lawyer for the care of the person and property? (In Quebec, powers of attorney are individuals representing the incapable.)
Who will look after your minor or dependent children and manage their finances?
Does your family or executor know where your will and other important documents are located?
Does your family really understand your intentions?
Do you have a good understanding of your financial situation ? What are your assets and liabilities?
If you own a business, what are your succession plans?
Are your beneficiaries willing to manage the assets they may receive?
2. Executor Discussion Task
Being an executor (or executor) is a difficult job. The duties and the tasks of an executor may include:
Arrange a funeral
Prepare an inventory of assets including real estate, bank accounts, investments, personal life insurance and trust. Prepare debt inventory (for example, mortgages, other loans, credit card balances).
Find a will and advise beneficiaries (in Quebec, submit a research request) wills of the Barreau du Québec and the Chambre des notaires du Québec).
Advise financial institutions
Register the approval, if applicable
Distribute assets to beneficiaries
Make mortgage payments, pay premiums, etc.
Cancellation of insurance, credit cards, utilities, government benefits (such as CPP), etc.
Maintain financial records and calculate management time
3. Think about family members who may need help.
If you do not give them direct control of your assets, you may want to provide financial support to some of your family members, for a fixed or indefinite period. Usually this is done through a certified trust. This type of trust will generally be created on the day of your death, according to the terms set out in your will. A probate trust may be appropriate to support:
Minor children until they grow up;
Adult children must protect the assets of creditors;
Family members with special needs who are unable to manage their own finances.
4. Second marriage cases
A succession settlement can be complicated by a second or subsequent marriage. If you have children from a previous marriage, you need to be clear about what you want them to inherit. If your current spouse owns the entire estate, he or she will be free to designate other beneficiaries. Asset allocation rules vary by province or territory.
5. Don’t underestimate emotional connections
As soon as you start talking about your estate to other family members, you can see that some properties have emotional significance. Resolving any potential conflicts now will help reduce the stress and confusion of settling your estate.
6. Consider a family business
If you own a business and want to pass it on to other family members, ask yourself if any of them want to run the business and if they have the skills to do the job. If some of your loved ones are interested, consider inviting them as soon as possible to the company’s activities to prepare for the future.
You should also consider protecting the value of your business from taxes that may be payable upon your death. If the time comes when money is scarce, your heirs may have to decide to sell or liquidate the family business, or take out a loan just to keep the business afloat.
7. Consider probate planning methods to ensure the transfer of your estate
No matter what steps you take, there will be tax implications for the estate. However, there are ways to reduce taxes and probate fees. Probate is an application to the Provincial Court to certify a will and appoint the executor(s). Where probate is required, fees are generally based on the total value of the property insured under the will.
8. Identify beneficiaries
Designating one or more beneficiaries in your registered accounts can help you effectively transfer your assets and ease the burden on your loved ones. (Not applicable in Quebec.)
Even if you think you have developed an estate plan, you should review it regularly and whenever your situation and applicable law change.