DO YOU HAVE A COMPREHENSIVE ESTATE PLAN?

WHERE THERE’S A WILL…

If you’re like most people, getting your personal financial plan started can be a challenge. And what about planning your estate? It’s probably not the first thing on your list of priorities. But why? Too intimidating? The truth is, estate planning should be a financial priority at almost any stage of life.

why is it important to have a plan? To ensure a simple, tax-efficient and organized transfer of your assets to loved ones when you’re gone. In fact, an estate plan can be essential for organizing your financial affairs and providing for the well-being of your family members. Furthermore, an estate plan should be updated on an ongoing basis – particularly as your circumstances change throughout your life.

When you start developing your estate plan, there’s a lot to think about. You want to live your life to the fullest and, at the same time, ensure your heirs will get the most out of the assets you’re setting aside for them. As a starting point, here are some of the basics you’ll need to consider.

YOUR WILL

A will is a legally enforceable declaration of how a person wishes his or her property to be distributed after death. A will can be quick and easy to produce and will generally cover the following:

•  NAMING THE EXECUTOR – THE  individual(s) or organization chosen to administer the estate; if you die without a will (referred to as “dying intestate”), the province where you reside will step in to administer your estate and, in this case, you’ve essentially forfeited your say on how things are divided and who will be in charge of the process.

•  NAMING BENEfiCIARIES OF THE ESTATE

(e.g., immediate or extended family, institutions, etc.)

•  THE DISTRIBUTION OF ASSETS WITHIN  the estate (e.g., investments, real estate, possessions)

NAMING A BENEFICIARY OTHER THAN YOUR ESTATE ON AN INSURANCE CONTRACT (SUCH AS A SEGREGATED

FUND CONTRACT) ALLOWS DEATH BENEFIT PROCEEDS TO BYPASS YOUR ESTATE.

NAMING A BENEFICIARY OUTSIDE THE WILL

NAMING A Beneficiary OTHER THAN  your estate on an insurance contract (such as a segregated fund contract) allows death benefit proceeds to bypass your estate. This means that your beneficiary will receive the proceeds privately 1 and directly while avoiding probate 2 and estate administration fees, which can be significant.

By avoiding your estate, the death benefit proceeds may also avoid claims by creditors of the estate and challenges to the validity of the will, which can delay the distribution of your estate by weeks, months or even years, and can be very costly.

In addition, insurance contracts offer the potential for creditor protection while you are alive if a beneficiary of the family class 3 is named or a beneficiary is named irrevocably.

REDUCING TAXES

We all know the old cliché that the only two certainties in life are death and taxes, but how much do we really know about taxes after death?

If you have a will, upon your death it is your executor’s responsibility to file a tax return for you. The government will consider you to have sold all your assets immediately before your death and any capital gains/losses will be crystallized. That may lead to a big tax bill.

Depending on your individual needs, there are strategies you can employ within your estate plan to minimize the amount of taxes due and have assets bypass your estate.

Here are some examples:

•  MAXIMIZE ASSET “ROLL-OVERS” –  transfers to your spouse that defer capital gains

•  GET ADVICE ON SETTING UP A TRUST TO  ensure your beneficiaries are well looked after

•  GIVE GIFTS OF CASH OR POSSESSIONS  while you are still alive

•  CONSIDER CHARITABLE DONATIONS TO  create valuable tax benefits

•  BUY LIFE INSURANCE THAT IS PAID OUT  to a named beneficiary on a tax- free basis

•  RESTRUCTURE INVESTMENTS WITH  insurance companies so assets can bypass your estate

The reassurance of having a strategy in place to preserve the value of your estate for loved ones is something to value. After all, why pay if you don’t have to? Work with your advisor to determine what exactly is in your estate, and then devise your plan.

CONDITIONS :
1. In Saskatchewan, jointly held property and insurance policies with a named beneficiary   are included on the application for probate despite the fact that these assets do not flow through the estate and are not subject to probate fees.

2. Probate is not applicable in Quebec. Probate fees vary by province.

3. In provinces other than Quebec, a family class beneficiary is any of the spouse, child, grandchild or parent of the annuitant. In Quebec, it is any of the spouse, ascendants and descendants of the owner.

Policy Wording

DO YOU HAVE A COMPREHENSIVE ESTATE PLAN?, Will?

Estate Planning, Manulife Insurance, Tips and Directions