Guide to estate planning

Like most people, you have definite goals, both personal and financial. However, without a plan to focus your efforts, you may find it difficult to achieve those goals.

One area that you should examine closely is your estate. Since estate planning is a wide-ranging topic, you need to concentrate on the components of a good estate plan and how they apply to your situation. Once you've considered the topics we are going to introduce, you can start to establish an estate plan that is appropriate for you.

Even if you already have a plan, keep reading. Estate planning is a continuing process. At different stages of your life, your situation and goals will change, and you may decide to modify your estate plan. An effective plan must be constantly monitored to ensure that it continues to be relevant.

Objectives of Estate Planning

Simply put, the goal of estate planning is to:

• Maximize the value of your assets, including the preservation and protection of property during your lifetime;
• Minimize and defer tax and other costs arising on your death;
• Allow for an orderly transition of assets to your beneficiaries; and
• Provide for your dependants, which can include decreasing their taxes where possible.

You will likely have other intentions as well. For example, you may want to leave specific assets to certain beneficiaries but want to treat them all fairly. Or, you may want to make a sizeable gift to charity upon your death.

Due to the wide variety of possible objectives, estate planning has often been described as an art rather than a science, but a few general rules will apply to all people.

Points to consider

In addition, some of your goals may be at odds with others. For example, if most of your net worth is invested in a family business, it may be difficult to treat all children equally if you decide to transfer your business to one child as your successor. Also, while minimizing tax is one of your chief objectives, you have to ensure tax reduction strategies do not conflict with your other objectives. Consequently, estate planning may become a balancing act, and you'll need to evaluate these issues and choose a plan that makes the most sense for you. Ultimately, an effective estate plan will address as many of your individual goals and wishes as possible.

When developing your estate plan, you shouldn't focus only on your beneficiaries; think about yourself and the income and assets you'll need to enjoy the lifestyle you want. A good estate plan will ensure that you have saved adequately for your retirement, either by contributing to your Registered Retirement Savings Plan (RRSP) or other pension plans, or through other savings. You don't want to arrange to give away assets and then realize later that you need them yourself.

Think of your family

A good estate plan will also help your family deal with your estate at a difficult time. They should not have to handle potentially difficult legal and tax matters. As there will be enough to cope with when the time comes, it is important to deal with your major decisions prior to death.

One final thing to keep in mind is the importance of discussing your plan with your family. Too many people assume that their family understands their goals and objectives for their assets. Estate planning works best when your family is aware of your plans and understands the reason for your decisions.

If you would like help in establishing your own estate plan, please call our office for a free consultation and guidelines to help you get started.