It’s usually not the first thing on people’s to do list, but the truth is estate planning should be a priority at almost any age.
Proper estate planning is a way to ensure a simple, organized and tax efficient transfer of your assets to your loved ones on your passing. Proper estate planning should also be updated on an ongoing basis, especially when the circumstances change in your life. The following are some points to think about when developing your estate plan:
Your will is a legal document setting out your wishes on how your assets will be distributed upon your death. A will generally contains the following:
- who will be responsible for administering your estate (choosing an Executor)
- how your estate and property will be distributed
- the beneficiaries of your estate
Naming Beneficiaries on Insurance Contracts
Naming specific beneficiaries on your insurance contracts (such as life insurance or segregated fund contracts) can allow death benefits to bypass your estate. By bypassing your estate the beneficiary will receive the funds privately and avoid probate, which can significantly reduce administration fees. Also, by avoiding your estate the death benefit proceeds can potentially avoid claims made by any creditors.
Minimize Taxes Owing on Death
There are different strategies you can use to minimize taxes owing on your final tax return thus leaving more money to your loved ones. Some of these strategies can include:
- Maximizing “spousal roll-overs” on eligible assets such as RRSP’s
- Giving gifts and cash away while you are still alive
- Making charitable donations
- purchasing life insurance that has death benefits payable directly to a beneficiary