Estate planning isn't just for wealthy families. It is a way to organize your financial affairs and communicate your wishes so your loved ones know what to do if you become unable to make decisions or after you die. A good estate plan can include your will, powers of attorney, beneficiary designations, financial accounts, insurance, property and other assets. Estate planning can be complex, particularly when you have significant assets, a blended family, a business, property in multiple jurisdictions or specific wishes for how your assets should be distributed. Consider working with qualified legal, tax and financial professionals to make sure your plan reflects your circumstances.
Estate planning is the process of organizing your assets, liabilities and wishes for the future.
Depending on your circumstances, your estate plan may address:
The goal isn't simply to decide who receives your assets. It's also about making sure the right people have the information and authority they need to manage your affairs.
Without a clear plan, your loved ones may face additional uncertainty and administrative work during an already difficult time.
Estate planning can help you:
Estate planning can also help you prepare for circumstances where you're alive but unable to make financial or personal decisions yourself.
A will is one of the most important components of an estate plan. It can set out how you want certain assets distributed and identify the person who will administer your estate, subject to applicable provincial law. If you don't have a will, your estate will be distributed according to the laws that apply in your province or territory. Your will should be reviewed when your circumstances change. Consider reviewing your estate plan after major life events such as marriage, separation, divorce, the birth or adoption of a child, a death in the family or a significant change in your assets. Because wills are legal documents, consider working with a qualified legal professional when creating or updating one.
Estate planning isn't only about what happens after you die. A power of attorney can allow someone to make certain decisions on your behalf if you become unable to do so, depending on the type of document and applicable provincial law. You may want to discuss both financial/property decisions and personal care decisions with a qualified professional. The rules surrounding powers of attorney vary by province, so Ontario residents should obtain advice appropriate to Ontario law.
Some financial products allow you to name beneficiaries directly. These can include certain registered accounts and life insurance policies. Your beneficiary designations should be reviewed alongside your will and overall estate plan. For example, you may have named a beneficiary on an RRSP many years ago and no longer have the same wishes. YNCU's RRSP materials specifically note the importance of beneficiary designations and their potential impact on how assets are transferred after death.
It can be difficult for someone to administer your estate if they don't know what you own.
Create a current list of:
You don't necessarily need to include sensitive passwords in your estate documents. Instead, make sure your executor or trusted person knows where important information can be found and how to access it appropriately.
Review the list regularly.
Your estate may have tax and other financial obligations when assets are transferred or disposed of after death. The amount and type of tax can depend on the assets involved, your circumstances and applicable laws. This is one reason estate planning should involve more than simply writing a will. A financial advisor, lawyer and tax professional can help you understand the potential implications of your plan.
Estate planning becomes particularly important when other people depend on you financially.
Consider whether your plan addresses:
Your family circumstances can change over time, so your estate plan should change with them.
Your estate plan is more useful when your loved ones can find the information they need.
Consider keeping an organized record of:
Make sure the appropriate people know where these documents are stored.
Estate planning isn't a one-time task. Review your plan after major life events and periodically to make sure it still reflects your wishes. Changes to your assets, family circumstances, relationships, business interests or applicable laws can all be reasons to revisit your plan.
You don't need to solve every estate-planning question in one sitting. Start by making a list of your assets and liabilities, reviewing your will and beneficiary designations, and thinking about who you would trust to make decisions on your behalf. Then speak with the appropriate legal, tax and financial professionals to make sure your plan is appropriate for your circumstances.
Estate planning is ultimately about making things clearer — for you and for the people who may one day need to manage your affairs.
This article is for general educational purposes only and does not constitute legal, tax, financial or estate-planning advice. Estate-planning rules vary by province and territory and can change. Consult qualified legal, tax and financial professionals for advice specific to your circumstances.