Table of Contents
- What is an Estate?
- What is Estate Planning?
- Wills and Codicils
- Is My Reluctance to Make a Will Justifiable?
- Why Should I Do Estate planning?
- Why Undertake Estate Planning Today?
- Who are the Players Involved in Estate planning?
- How Do You Choose an Estate Attorney?
- Some Other Things to Know About Estate Planning.
- Bottomline
“I Don’t Need Estate Planning! I Have so Little…” Really? Do you have no dependents, personal possessions, favorite family members, or debts? If that is not the case, which we are sure is not, estate planning is essential for you to understand and undertake.
Regarding estate planning, there are some basic concepts like a will, introduction to estate planning, guardianship, necessity of estate planning, succession, inheritance, power of attorney, and others, which every Canadian having some property and responsibilities should know.
What is an Estate?
An estate can be defined as all the property and wealth in possession or lined up for possession (such as insurance money) owned by a person, especially at their death. It includes land, properties movable and immovable, receivables, tangible or abstract holdings (such as shares and stocks), and other valuables, excluding liabilities.
What is Estate Planning?
Estate Planning involves determining how a person wishes to preserve, manage, and distribute their assets after death. It can also include some provisions for managing assets if they become incapacitated. Such planning includes preparing a few or several documents, categorized as wills and codicils, as explained below.
Wills and Codicils
The will lays down a person’s wishes for disposing of his property after his death. At the same time, codicils are allied documents that outline other matters related to representation, guardianship, personal directives, or any other miscellaneous wishes of a person.
However, some people hesitate to undertake estate planning even though it addresses vital issues related to their property.
Is My Reluctance to Make a Will Justifiable?
Solicitors often find that many people have a superstitious notion that “a will precedes death,” or they don’t want to give time to consideration of affairs related to death. Such hesitation is unwarranted. Nor is will-making a task to undertake at the last minute. Just like you manage your financial affairs during your life, the ease of your loved ones who are a part of your life depends on the decisions that may be less important to you but are vital for their comfort. In actuality, the well-being of thousands of people depends on the estate decisions their predecessors make before dying.
Why Should I Do Estate planning?
Benjamin Franklin once said: Nothing in the world can be said for sure except for death and taxes. Notably, liabilities, property, and wealth remain relevant even after death. These themes make estate planning another certainty one must deal with while they are still alive.
It would be best if you did it because it is about the security and prosperity of your spouses, children, grandchildren and close friends without you.
Moreover, such planning is essential to prevent your heirs from getting entangled in governmental red tapes.
Similarly, if you have minor children, they will not have access to your assets for quite some time after your death. In the absence of a guardian appointed by you within your life, the assets will be in the custody of the president of the high court. Moreover, the court may appoint someone from your family as their guardian. Such a person can even be the one that you do not wish to care for your children. Therefore, estate planning is essential.
Why Undertake Estate Planning Today?
Many people ask: why should I do it today if I can do it tomorrow? Statistically, there may be a tomorrow, but one should not rely on it. Acting now is mandatory because, in estate planning, tomorrow can become today instantly. Similarly, no one can predict the time of one’s death with certainty. It sneaks in and respects no time parameters. Since you are unique, your estate planning should also be unique. It would be best not to leave it to the discretion of a court that may not have the same beliefs, likings and preference patterns you have towards your family members.
“Plan for the worst, and you will never be unpleasantly surprised.”
Governmental regulations change every day. No one knows how complex the estate tax regime will be after two years. The government may pass a law and impose some more “death taxes” on you. So, do plan today.
Who are the Players Involved in Estate planning?
- An attorney
- A well-versed accountant
- A professional life insurance agent
- A financial advisor
How Do You Choose an Estate Attorney?
Not every attorney is an estate attorney. Many have significant practice in the field of tax and are also good at working in estate planning. However, while making the choice, look for an attorney who specializes in the field of estate planning to the exclusion of other areas.
Most people need help finding a good estate attorney because many attorneys don’t advertise. The best advice is to ask different insurance experts and financial advisors for help. Such people have been dealing with estate attorneys. They will be glad to make a recommendation based on their knowledge.
Most importantly, never go for a professional loner. These experts from different fields who are to plan your estate need to work not only with you but also with each other. Therefore, anyone you hire should be willing to work in a collective setting.
Some Other Things to Know About Estate Planning.
- Letter of Intent
It is a document left to your executor or beneficiary that states your wishes regarding a particular asset. While it may have little standing in the court of law, it can inform the judge about your inclinations if your will, for some reason, does not stand the test of validity.
- Power of Attorney
It is an essential document because it allows an agent to act on your behalf and make financial transactions if you become mentally incapable at any stage in life. Estate planning without disability planning is no planning at all. Without one, the court may have to decide on your behalf, and its decisions may reflect something other than what you may have wanted.
Such a delegation of power is revocable and can be returned to the principal when he becomes physically fit again.
- Will I Have Control Over My Assets Once I have Made a Will?
One reason people do not make a will is the misbelief that they will lose sway over their property. Notably, a will takes effect only at a person’s death. Although a will can dispense even the assets that a person procures after making the will, they will have full ownership of their property before their death. They can utilize it in any way they like.
- Revocation of a Will
A will is a thoroughly revokable instrument. It can be revoked by:
- A subsequent will
- Making a declaration of revocation in the same manner as making a will
- Destruction or burning of the will.
- Revocation of the will in the presence of a notary
A revocation can be partial or complete. Although an “irrevocability” clause is present in the will, one can annul a will by writing a new document containing an explicit “revocation clause” stating: I, at this moment, revoke all my previous wills.
- Succession vs Inheritance
In the eyes of attorneys, if not the laypeople, property is not a concrete holding. It is a set of rights. In that regard, inheritance is about the rights a person has over tangible properties that pass over to their heirs.
On the other hand, succession is the transfer to heirs, not of conventional property alone, but of all material and non-material belongings, including movable properties, bank balance, shares, office, position and status. Although people use these terms interchangeably, distinguishing between them is essential to understand estate planning better.
Bottomline
Have no plans? Worry not, plan not, if that is your choice, for Big Brother (the state) has a plan already made to dispose of your property. The Big Brother laws will distribute the property of nonplanners to state-sanctioned heirs. The result can, at times, be most discomforting. So, plan today.