As you embark on a new year filled with possibilities, consider prioritizing resolutions that ensure lasting financial security and peace of mind for you and your loved ones. Take these proactive steps in wealth and estate planning to safeguard your legacy and make certain that your wishes are honoured:
Make or update your Will
Assets: Provide a comprehensive inventory of your assets, including real estate, investments, and personal property.
Beneficiaries: Clearly outline who will inherit your assets, specifying individuals or groups of individuals.
Guardians: For parents of minor children, appoint guardians who will provide care and support in your absence.
Executorship: Choose a reliable executor to oversee the distribution of your assets in accordance with your wishes.
Funeral Wishes: Communicate your preferences for funeral arrangements, alleviating the burden on your loved ones during a challenging time.
Charitable Donations: If philanthropy is close to your heart, include provisions for charitable donations in your will.
Powers of Attorney
POA for Personal Care: Appoint an individual responsible for making determinations regarding your healthcare, nutrition, living arrangements, clothing, hygiene, and safety in the event you lack the capacity to make these decisions independently.
POA for Property: Appoint an individual to manage your financial affairs, covering everything from bill payments and managing debt to handling investments and property transactions in the event you lack the capacity to make these decisions independently.
Managing Assets outside of your Will (not included in your Estate)
Life Insurance: Review and update life insurance policies to align with your current financial situation and protect your loved ones. Designate beneficiaries to ensure the life insurance proceeds can be distributed without the need for Probate.
TFSA and RRSPs: Strategically manage Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) to maximize tax advantages. Designate beneficiaries to ensure the life insurance proceeds can be distributed without the need for Probate.
Joint Accounts: With a joint bank account comes the right of survivorship. This means that when one of the account owners passes away, the surviving owner will take full ownership of the account. In theory, the bank account will not form part of the deceased's estate since the surviving owner has full legal title to the account through the right of survivorship.
Joint Tenancy: A joint tenancy creates a right of survivorship, which means that if one party dies, their interest is automatically transferred to the surviving tenant(s).
Digital Assets
Social Media Accounts: Develop a plan for the management or closure of social media accounts, preserving your digital legacy.
Financial Accounts: Safeguard access information for online financial accounts to facilitate a smooth transition for your loved ones.
Cryptocurrency: Provide clear instructions on how to access and manage cryptocurrency holdings, addressing a frequently overlooked aspect of estate planning.
Password Management: Implement secure password practices and communicate access details to trusted individuals.
Business Succession Planning
Sole Proprietorships: If the business is a sole proprietorship, it ceases to operate upon the owner's death. Develop a comprehensive plan for the seamless transfer of ownership and management responsibilities.
Partnerships: Partnerships may or may not dissolve upon the death of a partner depending on the partnership agreement. Alternatively, a deceased partner's interest may be transferred to a designated party such as a spouse. It is important to make provisions for transfer of ownership upon the death of a partner to determine whether the business will continue to operate and if so, with whom at its helm.
Corporations and Shareholder Agreements: A Shareholders' Agreement typically covers crucial business transition matters such as ownership of shares, the transfer or sale of shares, procedures in the event of a shareholder's death, and the resolution of disputes among shareholders. Ownership of voting and preferred shares for a corporation can become a heavily contested matter if adequate provisions are not made.
Creditor Protection
Transferring Assets inter-vivos: Explore strategies for transferring assets to spouses or children during your lifetime as a gift to avoid complications with Probate.
Bankruptcy Protection: Bankruptcy protections are afforded to certain assets, such as PRDSPs, RRSPs, RRIFs, and DPSPs. Contribution to these plans over an individual's lifetime can ensure their family and dependants are guaranteed to receive some amount from their estate, especially if beneficiaries are designated from the outset.
Timing Considerations: Be mindful that contributions to the aforementioned assets (as PRDSPs, RRSPs, RRIFs, and DPSPs) and inter-vivos transfers made within 12 months of declaring bankruptcy may not receive the same level of protection.
By taking these proactive steps and deliberate measures, you can be confident that your loved ones will be well-provided for in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
