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Estate Planning > Overview

Overview

There is too much at stake not to plan…

For many of us, estate planning is something we know we should do but somehow manage to postpone until some indefinite "tomorrow"; or, once having developed a plan, put it away in a file for someone else to find. While both responses are understandable, neither is very wise. There is simply put, too much at stake…

In essence, estate planning concerns the establishment or continuation of a tradition. Just as in old Roman law, "traditio" meant a way of transferring the ownership of private property; this tradition involves the accumulation, conservation and distribution of assets. Your "estate" is both the real and personal property that you own, and your stance toward that property.

Many people have misconceptions about what estate planning is, and how it should apply to them.

Estate Planning is more than "Cranking out" a will

Proper Estate Planning is more just "cranking out" wills and doing probates, but whether it is merely the use of wills and community property agreements, or more sophisticated planning techniques, proper Estate Planning fulfills this basic definition:

I want to be the one in control of my estate for as long as I am able. If I become unable to manage my estate, I want to be the one who designates the person to manage my estate for me, without court intervention. Following my death, I want things to be as easy on my loved ones as possible. I want my estate to pass to the people and organizations that I designate, in the way I want. I want to avoid conflict over the administration of my estate, delays in having my estate settled and, finally, I want to pay the absolute minimum of taxes, court costs and lawyers fees possible.

Estate Planning is Unique and Personal

A proper estate plan, then, is something very personal, and no two plans will be exactly the same for any two people. A proper estate plan should be focused on you and your goals, ambitions, hopes and idiosyncrasies.

Throughout our lives we do many kinds of planning. We plan for college, plan for weddings, plan our finances and we even plan our vacations. During our short time here we very often accumulate important things; assets, life insurance, sentimental personal property, a business, perhaps, and most of all, we accumulate people we love and care for. For many of us, the assets that we accumulate during life are much more important than what can be purchased with them. They are symbolic of our hopes, dreams, ambitions, accomplishments and even our idiosyncrasies. Family wealth is strangely symbolic of our lives, and consequently, estate planning encompasses the essence of who we are, spiritually, socially and economically, and the way that we plan for the transition of our estates sends a direct and clear message to the people who will be inheriting our estates about how we care about them.

Most people readily agree that we have a responsibility to be good stewards of what we have worked hard for and received in life. The last thing that most people would ever desire to do would be to throw this all away, leaving their loved ones in a mess should they die. Yet many people fail to complete their responsibilities of stewardship by improperly planning for the transition of their estates when they die.

From a broad perspective, proper estate planning should encompass five important features:

Control

First, proper estate planning allows you to plan for yourself and your loved ones without giving up control of your affairs. If there is one desire consistently voiced by our clients, it is the word control. Most people desire to have the maximum control over their assets for as long a period as possible. Perhaps the greatest fear most people have is that they will lose control over their estate. Everyone has heard horror stories of evil trustees, advisors conspiring against the rich widow, and charlatans defrauding naïve spinsters out of their entire estates. Even if such extreme cases aren’t a concern, many people fear having to give up control over their assets in order to save taxes or to protect assets from potential creditors. Proper estate planning provides as much control as you desire in your lifetime.

Disability or Critical Illness Protection

Second, an effective estate plan allows you to anticipate the possibility and potential of your own disability or critical illness and provide for your needs if you become disabled. Improper disability planning can lead to a loss of control over your estate. Many people do not think of disability planning in their estate plan, yet it is a critical component of a proper estate plan.

Proper Distribution

Third, your estate plan allows you to give what you own to who you want to receive it, the way you want them to receive it, and when you want them to receive it. This aspect of estate planning requires careful consideration of the ramifications of how you provide your heirs with their inheritance.

Save Costs

Fourth, your estate plan allows you to save as many tax dollars, professional fees, and court costs as are legally possible to save. That includes lawyers’ fees, which are potentially a large part of estate settlement costs, but can also include the costs involved in taking a probate through court. There is an old saying; you can’t live without a lawyer, and you certainly can’t die without one! Perhaps this is true, but you certainly don’t have to share a large part of your estate with one! Proper estate planning minimizes these costs.

Efficient Plans

Finally, your estate plan should avoid as much hassle and frustration as possible for you and your loved ones, and distribute property in as efficient a manner as possible.

It is critical that you as an individual, with your desires, fears and concerns, be the focus of your estate plan. That’s why proper estate planning requires a competent professional who can ask the right questions to help you plan your estate.

Estate planning should not be done by “cookie-cutter”; but it is often approached this way. It is vitally important for the estate planner to take the time to learn about your concerns for yourself, your family, your children’s personalities, your fears, and your dreams and aspirations.

If you don’t state your desires and intentions, the court will impose statutes related to the distribution of your estate and the two may be very different.

You Can't Take It With You

Estate planning refers to the process of developing a plan for the creation, conservation, preservation and disposition of your estate in an orderly and effective manner so that your goals for yourself and your family can be realized with maximum safety and effectiveness.

If you're not sure if Estate Planning applies to you, consider the following:

  • It can help you avoid or reduce Probate Fees, Capital Gains Tax, and Estate
    Settlement Costs so more of your estate is passed on to your beneficiaries.
  • It allows you to say who gets what (to avoid family fights over your marble bust and
    other treasures, for instance).
  • It helps you to provide for your spouse and other remaining family members, and especially for any special concerns such as care of minors or handicapped family members.
  • It avoids delays in the distribution of your estate.
  • It reduces the cost of administering your estate (and you know how much it costs to shuffle paperwork nowadays).

Reasons You Should Have a Current Estate Plan

1. You have debts that would burden your family
2. You have small children or dependants
3. You have accumulated significant assets
4. Your death will trigger substantial tax liabilities
5. You own or operate a business or a farm
6. You have family heirlooms
7. You collect valuables such as art and antiques
8. You have a favourite charity you wish to benefit
9. You hold assets outside Canada or in more than one province

Typically there are two essential components to a good Estate Plan:

• The Financial Component
• The Administrative Component

The Financial component of Estate Planning deals with the assets and liabilities, you have accumulated while alive and well, and also what happens to those assets and liabilities at death. The Financial component also ensures that there will be sufficient funds to provide for your heirs, beneficiaries, charities, etc. as well as a plan to pay any outstanding taxes, loans or debts in the most cost efficient manner.

The Administrative component of Estate Planning deals with the implementation of a plan that ensures the distribution of your assets to your heirs and beneficiaries according to your wishes. Some of the more commonly used tools are gifts, wills, trusts, buy-sell agreements, Powers of Attorney, Representative Agreements, probate, etc.

Estate Planning

Financial:

• Goals & Objectives
• Assets & Liabilities
• Estate Settlement Costs
• Gifts & Legacies
• Taxation Issues
• Insurance

Administrative:

• Goals & Objectives
• Wills
• Buy-Sell Agreements for Business
• Powers Of Attorney
• Representation Agreements
• Trusts
• Gifts Documentation
• Probate

Proper estate planning may include some or all of the following:

• Control of assets during lifetime
• An updated will
• Right amount and type of life insurance
• Inter vivos and testamentary trusts where required
• Provision for favourite charities
• Continuation of business interests or business exit strategy
• Children and/or grandchildren’s education
• Providing instructions for care and management of assets if incompetent
• Protection of assets from creditors

The Estate Planning Team

One individual cannot be an expert in all facets of estate planning. Therefore, many estate owners use a team of two or more professionals to assist them in establishing an efficient and cost effective plan for their estate.

Wills And Trust Lawyer

Properly drafted wills, trusts and other documents can save many thousands of dollars in taxes and other estate settlement costs. Lawyers who specialize in the area of estate planning will assist you with the following.

• Review your estate goals
• Draft legal documents: wills, powers of attorney, letters of wishes
• Provide direction on various strategies and tactics
• Draft, validate and interpret trusts
• Represent the estate in litigation of wills and estate disputes
• Mediate or arbitrate any estate disputes
• Serve as trustee, executor or agent if asked
• Assist estate and trust administrators to interpret your wishes

Financial Advisor/Insurance Agent

Life insurance is a unique product that provides cash at the most critical times. A professional advisor can assist in determining the face amount, type of policy, ownership, and beneficiary arrangements. This advisor may have special training in investments and can assist in helping you in accumulating funds for your children’s college education and your retirement. He/she will help develop estate goals and assist you with the following:

• Liaise with other practitioners on the team
• Perform cost-benefit analysis
• Provide strategies for you to maximize size of estate
• Provide direction on various strategies and their implementation
• Ensure timely planning and implementation of plan
• Ensure competent management of assets
• Provide support for you when creating your plan
• Communicate with beneficiaries and help with administration (when needed and as appropriate)

Accountant (CA/CGA)

Income tax and estate tax returns must be filed shortly after a person dies. During your lifetime, a qualified accountant specializing in tax and estate planning can help prevent you from paying taxes unnecessarily by:

• Assessing your estate goals from a tax perspective and advise you accordingly
• Reduce the tax bite during your lifetime and at death
• Advise you on tax implications of various strategies and tactics

Trust Officer

In some cases, family members are not the best choice to handle the affairs of your estate. Corporate executors and trustees can eliminate bickering and hard feelings that can arise among siblings who think the appointed child did not properly carry out his or her duties.

Planned Giving Specialist

A planned giving specialist is well versed in the advantages of lifetime charitable gifts or bequests after one dies. Many benefits are available in this area.

Team Leader

You are the Team Leader. After carefully reviewing the recommendations of the team, you will decide which route to take.

Probate Fees In BC

Probate essentially involves an executor filing an inventory (listing) of your assets and liabilities with the courts. These filings are generally open for public inspection. However, there are certain types of investments and estate planning documents that the court does not require being filed, i.e. insurance beneficiaries and jointures. If privacy is an important factor, you may want to consider exploring these opportunities. As these eligible investments will not form part of the probatable assets of the deceased’s estate, there can be a significant cost saving as well. The cost of the probate process varies, depending on the province and the assets in the estate. The figures below illustrate the current fees that are charged by the provincial court to "verify" an estate in BC.

Probate Fee Calculations and Assessment in BC

$0 - $10,000 ($0)
$10,000 - $25,000 ($208)
$25,000 – $50,000 ($6.00 per thousand $)
$50,000+ ($14.00 per thousand $)

Remember, a will is probated - assets are not.

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