What’s Estate Planning anyways? It is the process of creating a detailed plan on how your assets will be distributed in the event of your death, while also minimizing tax liabilities. Often, it is thought that Estate Planning is for the uber-wealthy. The truth is that middle class individuals can benefit themselves and their family from enormous tax expenses if planning accordingly. Wills are only one piece of the puzzle regarding Estate Planning. You can attempt to do this on your own by using kits, apps, and websites... Just earlier this year, a February 20, 2020 Queen’s Bench for Saskatchewan case (Gust vs. Langan et al., 2020 SKQB 48 42) considered whether a will handwritten on a McDonald’s napkin was legally valid. An informal handwritten will (holograph will) may be valid in some jurisdictions even if it is neither dated nor contains a witness signature. In this situation, the will contained neither and very simply requested that his property be split evenly between his six children that were alive at the time it was written. While the criteria for a valid will can vary by province, there are often similarities. The Court also found that the wording and circumstances surrounding the signing of the will demonstrated that it constituted a fixed and final expression of intention. The will was found to be valid. Most of us would not want to take a chance on how our assets are distributed and taxed. Before you contact qualified professionals, you should start by gathering and documenting information on your assets such as:
Bank accounts
Retirement accounts
Insurance policies, including both business and personal insurances like life insurance
Titles; deeds; proof of ownership for property, vehicles, and other belongings; proof of joint ownership of assets
Estate inventory (heirloom items, keepsakes, etc.)
Another piece to Estate Planning is Family Trusts Trusts are designed to hold money, investments, or property for various purposes. Different types of trusts - testamentary trusts, living (intervivos) trust, revocable trusts, irrevocable trusts - protect assets in different ways. Trusts can facilitate a smooth and speedy transfer of assets upon death, eliminate probate costs, minimize estate taxes, and ensure that the settlor’s assets are used in the way intended. For example, a trust can allow a parent to make sure a child doesn’t squander an inheritance. You can read more about reasons to set up a trust.
Link:
https://www.getsmarteraboutmoney.ca/plan-manage/planning-basics/wills-estate-planning/using-trusts-in-estate-planning/
Some questions that you may want to ask yourself are:
Are there specific assets you want to give to specific family members?
At what point would you want your family members and loved ones to receive specific assets? After your death, during your lifetime, or at a specific time?
Do you want to leave parts of your estate to charity? If so, which one(s)?
How important is it for you to minimize income tax and probate fees?
Do you have a life insurance policy to cover anticipated capital gains taxes that will arise after your death and protect your business against loss, if you own one?
Who do you want to transfer registered assets like RRIFs and RRSPs to? These accounts, depending on your beneficiary designations, can be transferred to a surviving spouse or common-law partner, a dependent, or a designated beneficiary.
In the event of a separation/divorce for your beneficiary how would you like to protect their part of the family trust?
How do you envision for the family business to continue or not should you (sole owner) become incapacitated to make decisions?
Hope this blog gave you an opportunity to learn about Estate Planning and Family Trust. Should you need any more information about this or other topics connect with us by filling out the Contact Us Form.
Link:
https://www.blossomcpa.ca/contact4