Without a proper estate plan in place, this could cause a long-lasting negative impact on your loved ones, even if you do not have a pricey home or valuable art to pass down.
TORONTO (PRWEB) May 25, 2019
No matter how large or modest, everyone has an estate. Whether it’s your home, car, bank account, investments, insurance policies, RRSPs/RRIFs, real estate, jewelry, art or other personal possessions, you want to make sure these are bequeathed to the right people and/or organizations.
Estate planning ensures your entire life’s belongings are distributed in the manner in which you desire, with the least amount paid in taxes and legal fees. It also ensures that your family is cared for if something were to happen to you. In other words, estate planning determines how your financial affairs and children will be cared for, otherwise the court will often decide on your behalf. Not only could these decisions not be the ones you desire, but it could also take years to resolve and cause problems between your loved ones.
Estate planning can be a complicated and overwhelming process. Hiring a professional will ensure that informed decisions are made and your estate is in good hands. Consulting a financial planner on your full financial situation will allow him or her to quarterback the estate planning process, which would involve coordination with a lawyer and possibly an accountant that will help plan the distribution of assets upon death in the most tax-efficient way. It also is very important for clients to share their thoughts on splitting their assets and sharing all information on their financial situation. The entire estate planning process would be catered to the client’s wishes of how they would like things to be carried out.
Q: Why is estate planning important?
Fabio: Estate planning protects your loved ones and helps them avoid any devastating consequences. Firstly, you will be able to choose who will inherit your assets, rather than having these decisions made on your behalf in court. This not only prevents tension and conflict that may arise amongst your loved ones, but can also reduce probate fees. Probate is the process that involves authenticating your will, assessing the value of your assets, ensuring all your bills and taxes are paid and distributing what is left of your assets.
This process is known to take months to resolve, making it extremely costly if not planned properly. In fact, in Ontario probate fees are charged at a rate of 0.05% of the first $50,000, and 1.5% of all remaining estate assets.
Estate planning is especially important for families with young children, as creating a will, a big portion of estate planning will designate how your children under the age of 18 will be taken care of and what items in your estate will be inherited by them when they come-of-age. It is very important for parents to be prepared and protect their families, because without a will, the court can decide who the guardian of their children will be. Estate planning also prevents your estate from overpaying taxes. It also involves choosing someone to take charge of your finances and make decisions about your personal health, should you become mentally incapacitated while you are still alive. Evidently, estate planning will help you take control on certain aspects of your life and death, and protect the people you love the most.
Q: Are estate plans for everyone?
Fabio: A common misconception is that estate planning is just for retired people or individuals that are very well off. However, the truth in the matter is that no one can successfully predict how long they will live, and illnesses as well as accidents can occur when we least expect them to. Thus, at the very least, we should prepare to protect our loved ones that remain in these situations. Also, individuals with more modest assets should be thinking of ways to preserve it. In addition, if you are single, estate planning helps to make sure your assets go to individuals or charities you choose.
Q: What are the first steps in creating an estate plan?
Fabio: There are many steps in creating an estate plan. One way to start is by talking to your financial planner, accountant and/or lawyer and sharing your financial situation and wishes for your estate with them. They will give their professional opinion on what they think is the best way to leave your estate, in accordance to your wishes. This process may take time, but it is best to be completed when you are in good health, mind and body. Afterwards, a power of attorney and a Will should be put together, preferably by a lawyer. A financial power of attorney is appointed to handle your financial matters if you were unable to do so, which would otherwise be passed over to an Office of the Public Guardian and Trustee to step in and look after your affairs. A personal care power of attorney or living will should also be appointed to make decisions regarding your personal health care issues. This person should be someone you trust and someone that understands your beliefs, as this person may have to step in should the “plug be pulled”. Another step in estate planning involves preparing a will. Without a will, no one has the authority to act or distribute your estate, so the court appoints an administrator to do it in accordance with provincial legislation, which may not be the intended way of the deceased. Creating a will involves the appointment of an executor to administer your estate, directions on organ donations and funeral arrangements, an outline of how your assets will be distributed, choosing a guardian to look after your minor children, and planning ahead to save taxes. It is very important to hire a professional to prepare your will, as there are many methods related to fair distribution of your assets and planning that can help reduce taxes that may not be very obvious to a non-professional. Preparing an estate directory, which is a document where one lists all of their personal property is also very important. This way, your executor can easily locate all of your documents and property of the deceased, which can sometimes be time consuming or impossible for them to find. This would include the location of bank accounts, investment assets, safety deposit boxes, deeds to real estate, and life insurance policies.
Without a proper estate plan in place, this could cause a long-lasting negative impact on your loved ones, even if you do not have a pricey home or valuable art to pass down. Consult a financial advisor today to get started on estate planning.
About Fabio Ventolini: Fabio Ventolini is a trusted specialist in tax, retirement and estate planning for executives, business owners and affluent families. For more than 21 years, he has worked closely with clients to generate tailored financial planning and financial services. He recently joined Bellwether Family Wealth, a division of Bellwether Investment Management Inc. as the Vice President and Family Wealth Advisor. Through this role, he guides the management of corporate investments and protects their assets from creditors and liabilities. He also takes on financial planning roles for affluent individuals and families.
Fabio Ventolini can be contacted at firstname.lastname@example.org.
This article was written by My An Tran, Senior Copywriter at Mrkt360.