What is Estate Planning?

September 14, 2020
What is Estate Planning?

No one likes to think about their own mortality, but when it comes to planning for the future, it’s naive to ignore the inevitable. We’re all going to pass on eventually — and unfortunately, there’s really no way to know when. Wouldn’t you rather take steps now to plan for your family’s financial future once you’re gone? That’s what estate planning is all about and Prometheus Private Advisory Group is here to show you how to do it.

As financial planners in Vancouver, we’re experts in helping people plan for their future — including their eventual passing. We know it’s hard to imagine your untimely (or even elderly) death, but the sooner you start planning for the worst, the better off your family will be.

Here, you’ll learn:

  1. The definition of estate planning
  2. Why estate planning matters
  3. The estate planning checklist

Estate Planning 101

When you think about what happens to your estate once you pass away, the first thing that comes to mind is probably your will. While a will is absolutely a key part of the estate planning process, it’s not the only thing that matters. That said, if you don’t have a will already, that’s a great place to start!

Estate planning refers to the process of preparing and arranging for the management and distribution of your property and assets in the event of your death or incapacitation. In simpler terms, it’s your plan for how your stuff will be doled out to your family, friends or other recipients after you die. Your detailed instructions will officially be written out in your will but estate planning involves many other aspects, such as setting up trusts, naming an executor and beneficiaries, making charitable donations, making funeral arrangements, and more.

A Guide to Estate Planning

We know that estate planning can get overwhelming. Aside from the absurdity of pondering your own demise, you’ll need to do a deep dive into your own finances and make big decisions about what will happen to your assets. Here’s a simple guide to estate planning in Canada to help you get started.

Prepare to Write a Will

First thing first, you’ll want to write a will that details out your wishes: who you want in charge of your estate and where you want your money and other assets to go. Be sure to include instructions for the following:

  1. Distribute your assets: Create an up-to-date, detailed list of your assets and who will get what. If there are any specific items that you want a certain person to receive, this is where you’ll state it.
  2. Name beneficiaries: Make a list of the people who will inherit your assets. Have secondary options in case your beneficiaries predecease you.
  3. Designate guardians for any minors: If you have children or other dependents who are minors, make arrangements for who will take care of them. Always be sure that your preferred guardians are up for the task and review your choice as your child gets older.
  4. Name an executor: Your executor will be the one who carries out your wishes when you die. Choose someone who is capable of handling the responsibility and also has the time for it. Settling an estate is no simple task, so it’s important that your executor knows what they’re getting into.
  5. Talk to a lawyer or notary public: For peace of mind, you may wish to get a lawyer or notary public to look over your will. While getting your will notarized or signed by a lawyer is not required, it can help to speed up the probate process so it’s something to consider.

Name your Power of Attorney:

The person you choose to act under your power of attorney document is responsible for making decisions on your behalf. In Canada, a general power of attorney manages your property and finances while you are still mentally able to do so yourself and a continuing (or enduring) power of attorney manages your financial assets if you become mentally incapacitated.

Buy Life Insurance:

Life insurance is a critical part of any estate plan. It protects your family financially and ensures they can continue their current lifestyle once you pass. Life insurance can also help pay for taxes and other liabilities that may come up after death. Make sure to keep up-to-date beneficiaries for your life insurance. As insurance experts in Vancouver, we can help you out.

Plan (and Prepay) for your Funeral:

Funerals can be very expensive. Planning ahead, and potentially even prepaying, for your funeral can take this stressful expense off your family’s shoulders.

Give Gifts or Charitable Donations:

Also called planned giving or legacy giving, charitable donations are a fantastic way to distribute your wealth after you’re gone. You can plan ahead to leave a portion of your money to causes that matter to you, which can give you an opportunity to donate funds that you wouldn’t be able to afford while you’re alive. Giving to charity also helps you save on taxes. Learn all about legacy giving here.

Set Up Trust Funds:

Trusts can be a valuable way to provide income for your family members. There are two main types of trust funds in Canada: testamentary trusts and inter vivos trusts. The first is created and begins after you die whereas the latter is set up while you’re still alive. The type you choose depends on your wishes for your wealth.

Why Estate Planning is Important

You might be wondering why you should worry about estate planning in the first place. Once you’re gone, you won’t be around to see what happens to your wealth anyway. But if you don’t have a plan for your estate, it can be extremely stressful for the people you leave behind to wade through your assets, debts, taxes and so on.

Creating an estate plan is about a lot more than just dictating who gets what. It gives you peace of mind that your wealth will be divided according to your wishes, and allows your friends and family to focus on what’s really important: grieving the loss of a beloved family member.

At Prometheus Private Advisory Group, we believe the key to estate planning is to start as soon as possible. That way, if the worst happens, you can rest in peace that your family is financially secure. Ready to start planning your estate? Contact us to talk to one of Vancouver’s estate planning experts today.

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