604-576-8540 info@malikcpa.ca

Many Canadians put a lot of effort into saving for the day when they retire, but fail to pay attention to estate planning.

While it might not be such a pleasing prospect as saving for retirement, what happens to your estate in the event of your death could be out of your control if you fail to make appropriate plans. For your assets to be passed as easily as possible to your beneficiaries, you would be advised to work with a trust and estate accountant.

From clearly documenting where you hold property, to making charitable donations and ownership structuring, there are some important considerations to make when planning your estate, and here are the top 5:

  1. Ensure powers of attorney and a will are in place

Should you become incapacitated and not able to deal with your affairs, having both a health and financial power of attorney in place can be crucial. When you die, however, your will kicks in, and powers of attorney are no longer relevant.

For anyone with complex financial affairs, you may wish to add a statement to your will that explains your reasoning behind the way it is written.

  1. Carefully name your executors

While you can name as many people as you wish to be an executor of your estate, it’s important that you assess their suitability for the role carefully, and ask their permission before naming them. Where possible, avoid using someone who isn’t a resident of Canada, or who may not be in the future.

  1. Consider using joint accounts

Should there be a situation in which bills need to be paid before the will is probated and your named executors haven’t already been given access to your bank accounts, a joint account might be advisable. Just be sure to let your financial institution know about this in writing, and clearly state that the decision has only been made to facilitate the planning and management of your estate. Consider this decision carefully, however, as any transfers made to a joint account, might not be reversible.

  1. Determine whether there is a need for life insurance

Helping to create an estate to support your heirs in the event of your death, and preserving an estate should taxes arise when you die, life insurance can be helpful when dealing with estate planning. Life insurance may be necessary to bridge the gap in the estate that you plan to leave your heirs, and if the estate will have a significant amount of funds in it, and your heirs don’t specifically need any financial assistance, it might not be needed. Should there be any assets that once you die, will not be liquidated, or any unpaid taxes, life insurance could help make up the shortfall should there not be enough funds in the estate to deal with this.

  1. Consider whether a trust might be needed

Created before, or on the event of your passing as part of your will, a trust might be beneficial in certain instances, such as if a beneficiary isn’t capable of dealing with money responsibly (and this can be for any number of reasons), or if they are a minor. If there are children that have come from a previous marriage, a spousal trust might also be sensible, and a consultation with a trust tax accountant could help you decide.

Note that trusts typically hold funds until the point in which they are no longer needed.

For further guidance on anything discussed in this article, or to talk informally about estate and trust planning procedures, reach out to a local CPA firm specializing in this area.