We often focus most of our planning on things like building wealth, paying off debt, transitioning to retirement, and taking care of ourselves physically and mentally.
All these worthy projects should be joined by another – estate planning. It’s important to think about what your loved ones will need once you’re gone.
Save with SPP took a look around the Interweb to see what the experts advise about estate planning for Canadians.
At the Advice for Investors blog, the main tips are having an updated will, naming powers of attorney and jointly holding assets. The blog cites a recent RBC study that found that only half of Canadians had a will and “one in three had done nothing at all to prepare for passing on wealth to the next generation.”
Without a will, the blog warns, “provincial bureacrats will determine how the estate is distributed,” rather than you. Having powers of attorney in place for legal/financial matters and health will be of critical importance should you suddenly lose the ability to manage your own affairs, the blog notes.
And when you make your assets joint with your spouse, “the interests of a deceased owner automatically gets transferred to the remaining surviving owners,” the blog notes.
The MoneySense blog adds in a few more ideas – life insurance, the idea of giving away money to family while you are still alive and setting up trusts for kids and grandkids.
Insurance, notes Lorne Marr of LSM Insurance in the MoneySense blog, “may be used as an estate planning tool – an opportunity to leave a legacy or pay taxes so your heirs don’t have to.” The article suggests insurance is best taken out at a young age, when your health is at its best. You should buy enough insurance to cover all your debts and replace what you earn, the article notes.
Giving gifts to adult children while you are still alive “may reduce the overall tax burden on your estate when you die,” notes Lawrence Pascoe, an Ottawa attorney, in the MoneySense article. “Gifting money is a good way to help out your kids while you’re still alive and can watch them enjoy it,” he states in the article.
For younger kids, the article notes, you can set up a trust account that provides them with income at a later age. “You can stipulate what the funds can be used for, such as educational expenses, a new home, retirement savings,” the article notes.
The Manulife Financial website devotes an entire web page to one thing – beneficiary designation for insurance and/or a retirement plan.
If you don’t name a beneficiary – or name minor children as one – your estate may get tied up in probate, the article warns. In some provinces your spouse is automatically your beneficiary – check before you sign, the article suggests. If there’s a way to name a contingent beneficiary – someone to pay out the assets to if your chosen beneficiary dies before the payout – do so. And be sure to review your beneficiary designations regularly, the article concludes.
If you’re a member of the Saskatchewan Pension Plan you can look after your survivors in several ways. Your SPP beneficiary will receive any assets in your account if you die before collecting a pension and a variety of different options are available for your spouse and beneficiary upon your death after retirement. Check out SPP today.
Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.