Estate Planning 101
July 9, 2019Financial Fitness
Regardless of your age, income or the size of your estate – it’s important to think about estate planning as an important part of being wise with money. Estate planning is simply the process of preserving and protecting your assets; and then arranging for them to be passed on to your beneficiaries, whether family, friends, charities, or some combination thereof, as efficiently as possible.
The truth is that without a will, powers of attorney for property and for personal care, and perhaps one or more trusts – some important decisions will be out of your control. Without a will, the Crown would choose an administrator for your estate, a guardian for your minor children and a statutorily defined disposition of your assets.
Without a power of attorney for personal care, even if your family members knew your wishes, they would have to request a court order to be permitted to make healthcare decisions on your behalf. Perfect strangers could be managing your affairs, regardless of your wishes.
Questions to Answer now
- Whom should you choose to be the executor of your estate, power of attorney for property and power of attorney for personal care?
- Who are the beneficiaries that you would appoint to receive your estate?
- Who would look after your children’s personal needs and financial well-being if you die before they become adults? Costly, time-consuming and emotionally stressful situations may be avoided with some advanced planning explained below.
Basic Estate Planning
A Will allows you to control delivery of your assets upon your death by specifying whom you wish to receive them. A very important part of a will is to name an executor who will be responsible to collect and distribute assets, and to administer your estate in accordance with the terms of the will. Another important aspect of the will is to designate a guardian for your minor children.
A trust is a fiduciary arrangement – allowing a third party or trustee to manage assets on behalf of a beneficiary or beneficiaries. A trust can be established within the will (i.e., a testamentary trust) or during one’s lifetime (i.e., an inter-vivos trust). Trusts can be used to manage assets on behalf of minors or disabled adult heirs, to protect beneficiaries from third-party claims, to provide for more favourable tax treatment of income, or a host of other purposes. There are many ways to arrange a trust to specify exactly how and when the assets are passed to the beneficiaries.
A power of attorney for property is for appointing one or more people to act on your behalf in regard to your financial and business matters. A power of attorney for property is typically utilized when you become unable to manage your own affairs. Your attorney for property will have the ability to access bank accounts, sign and file income tax returns, sell stocks, manage real estate etc. Or you may limit your power of attorney to authorization for a single transaction or for a specified period of time.
A power of attorney for personal care, which may also be known as a proxy or living will – authorizes one or more people to act on your behalf to make medical decisions according to your wishes. This power of attorney comes into effect when you are unable to make medical decisions by yourself. You may limit this “healthcare” power of attorney to certain types of decisions or you can give permission for making decisions for any issue that may arise – including psychiatric treatment, nursing care, hospitalization, treatment in a nursing home, home health care, etc.
When you incorporate “estate planning 101” into your planning process – you give the people you love the tools to help you manage your affairs. Having an estate plan is critical. Speak with a Financial Representative who can help you today!
And remember – FaithLife Financial Members who employ the services of a legal professional to draft or update a personal will or power of attorney can take advantage of a Member benefit for reimbursement up to $100 (available once every five years).