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Estate planning basics
Making life easier for those left behind
BY COLIN S. RITCHIE
ALTHOUGH NO AMOUNT of preparation can
solve all the problems your family may face on
your death, there is a lot you can do to make things
clearer, simpler and less stressful. Here are some
quick tips on how to do just that.
Ensure your will is current, complete and unambiguous. Sit down with a lawyer to review your
entire estate plan and ensure your will is both
up-to-date and clear. Don’t settle for a kit—a good
lawyer can foresee problems you may not realize
exist. This is vital if you have a blended family or
expect your spouse or children to disagree with
your wishes, since this may require extra steps.
Provide additional information and instructions
to those left behind. These include:
• A memo specifying how your personal
effects are to be divided.
• Instructions to your guardians on how you
want your children raised, potentially addressing matters such as religion, education, diet,
basic values, screen time, volunteering, part-time jobs, etc.
• Instructions to trustees managing money
for your heirs regarding appropriate expenditures
and lifestyles. Should the trust buy cars for the
children and, if so, at what age? Should the car be
a new BMW or an old Toyota? Should the trust
fundee travel before or after university and, if so,
for how long? Should they be on a hostel budget
or the caviar plan? If your trustees are not also
guardians, how generous should the trust be when
compensating guardians for your children’s
expenses? For example, if the guardians take your
children on vacation, should the trust cover some
or all of the guardians’ expenses?
• Specific funeral, burial and commemorative
event instructions. Because few people discuss
these details in advance, many heirs have the
added stress of both deciding on what is best and
then making it happen on short notice with no
guidance. Making as many of the arrangements
in advance (or even prepaying for it), through a
funeral home, minimizes this problem, reduces
the chance of family fights and hopefully prevents
overspending by heirs trying to guess whether
you would want the mahogany or the pine casket.
Review beneficiary designations. Review reg-
istered investments and life insurance products
with your lawyer and financial planner to make
sure the right people inherit at the right time
while minimizing the tax consequences. If you
have a spouse, I suggest using successor holder/
annuitant designations gifting tax-free savings
accounts and/or a registered retired income fund.
I also caution against leaving large sums of money
from any source, particularly insurance policies, to
younger heirs, no matter how responsible they are.
As a rule of thumb, consider keeping the money in
trust until the designee is at least age ;;.
Ensure that your dependants have enough
money for their needs while your estate is being
administered. Options include naming them to
receive life insurance proceeds directly in some
cases, or ensuring they have sufficient assets
in their own names or through jointly owned
accounts (although the latter should be discussed
with a lawyer and is not always appropriate).
Investigate your family’s financial needs. Would
they have enough money if you were not around to
support them? Consider life insurance for regular
expenses and for paying final tax bills, particularly if the alternative is selling legacy assets like
a cottage or the family business.
Leave detailed information for assets and
accounts. This should include passwords and
professional advisers’ names and contact information. Consider password manager applications
like LastPass that protect your passwords while
you’re alive and distribute this information to
others only on your death or incapacity. Such sites
can also store your list of assets and accounts until
such time, for your protection.
Discuss probate fee planning with a lawyer.
Probate fees vary by province and according to the
value of your assets. In some cases you pay a small
flat fee and in others a percentage (up to about ;.;
per cent). Regardless, the process itself may delay
distributing your estate and trigger lawyer fees.
By taking some or all of these steps you can
make an extremely difficult time for your family
that much more bearable. C
Colin S. Ritchie ( colinsritchie.com), LL.B., CFP,
CLU and FMA, is a Vancouver-based, fee-for-service
lawyer and ;nancial planner.