Estate Planning

Estate planning is the “art of dying neatly”. If you neglect to plan for a serious illness or untimely death, and either occurs, you may create confusion and difficulties for your loved ones at a highly emotional time. The financial consequence could be that an unnecessarily large portion of your estate goes to the tax department or is spent on administration costs such as legal or accounting fees.

Estate planning ensures that if you are physically or mentally incapacitated, your affairs will be managed in a manner that you have prescribed and upon your death, your estate will be distributed according to your instructions.

Objectives of Estate Planning

The four fundamental objectives of Estate Planning are to ensure that:

  1. Your estate is managed according to your wishes if a disability renders you incapable of doing so yourself
  2. Appropriate insurance plans protect your dependents, meet their liquidity needs, and, in case you are disabled, provide ongoing income
  3. Your assets are distributed to the appropriate beneficiaries at the time of your death
  4. Tax and administration costs are minimized

The Estate Planning Process

Estate Planning involves the following important steps:

  • Identify all of your assets and potential liabilities
  • Identify family members, friends, or other individuals who would be capable and willing to play a role in looking after your affairs
  • Confirm your beneficiaries and indicate which of your assets you would like each to receive
  • Review the potential tax consequences of each alternative available to you
  • Consider costs and ease of administration when assessing your alternatives

The Tools of Estate Planning

The following legal instruments and products are available to assist in your Estate Planning:

Enduring Power of Attorney

  • Available in most Canadian provinces
  • Allows you to arrange for the care of your financial affairs should you become mentally incapacitated

Representation Agreement

  • Available in some Canadian provinces
  • Deals with broader, more complex issues than the Enduring Power of Attorney
  • Allows you to provide more detailed direction not only for your financial affairs, but also for your health and lifestyle issues and just about anything else you wish to include

Will

  • Applicable across Canada
  • Indicates in writing, how you wish your assets to be distributed after your death

If you die without a valid will, the Province dictates the distribution of your assets. The results likely will not be what you would have wanted.

Jointures (Joint ownership with right of survivorship)

  • Applies to many types of assets
  • Allows assets to go automatically to your survivor(s) when you die
  • Can be an effective way to reduce costs and avoid challenges under the Wills Variation Act

Trusts

Can be used for a variety of purposes including private gifts, protection of assets from creditors, or maintaining control over your assets for years after your death

Insurance

The following are some of a wide variety of products that can protect you from risk:

  • Disability insurance — provides replacement income if you become disabled and unable to work
  • Life insurance — provides a lump sum of tax-free capital to cover liabilities, replace your income for dependents, or fund specific gifts to individuals, charities, or others
  • Property/casualty insurance — covers a wide range of risks such as theft or fire, as well as exposure to liability
  • Long-term care insurance — provides an income to cover long-term care costs incurred either at home or in an institution
  • Critical illness insurance — provides a lump-sum payment if you contract cancer, heart disease, or other major illness defined in your policy
  • Travel insurance — offsets potentially prohibitive medical costs that might be required when travelling in destinations that are not covered by your provincial medical insurance

Please note that due to the complex nature of Power of Attorney Appointments, Representation Agreements, Wills, and Trusts, they should always be prepared and reviewed by a lawyer.

The Role of Your Blackburn Davis Financial Advisor

Blackburn Davis provides Estate Planning as a service to our clients. The role of your Advisor in Estate Planning includes:

  • Identify your Estate Planning needs
  • Assess your current financial situation, existing documents relative to your estate, and insurance products
  • Work with you to develop a strategy and plan to meet your Estate Planning needs
  • Coordinate the services of your lawyer and accountant and work with them to ensure your plan is implemented

If you do not already have a lawyer and accountant, we will recommend ones who we know are knowledgeable and experienced in Estate Planning services.