Protecting the value of your estate is critical if you want to make sure that you leave sufficient cash for your heirs. It is not only about the amount but the access to the cash. Here are ten estate planning tips to make things easier.
Make sure you have a current will.
Invest in an enduring power of attorney and consider a representation agreement to ensure you will be provided for in case you can no longer manage your affairs
Reduce the size of your estate, as it will reduce the probate and executor fees you pay. Place all non-registered assets in joint name with your spouse and designate beneficiaries of your life insurance and registered accounts like RSPs and RRIFs. Consider non-registered GICs offered through life insurance companies as they allow you to name a beneficiary therefore bypassing your estate. Segregated funds, which are essentially mutual funds sold through life insurance companies, also bypass your estate if you name a beneficiary other than your estate.
Give gifts during your lifetime.
Use life insurance to fund the tax liability of your estate. Life insurance proceeds pass directly to beneficiaries and/or be paid directly to the estate to fund tax liabilities. Remember that Life insurance is paid out tax-free.
Consider making charitable donations through your will or via a beneficiary designation on an insurance policy or your RSP or RRIF. There are federal and provincial credits available for charitable donations which could dramatically reduce the tax liability of your estate.
Use a qualified financial advisor, accountant and or lawyer to advise on your estate.
Finally, make sure you discuss the plan with your executor(s).
Remember to always consult your advisor before taking any action.
Written by Stuart Kirk, CIM. Stuart Kirk is a Retirement Planning Specialist with Precision Wealth Management Inc. The opinions expressed are those of the author and may not necessarily reflect those of Precision Wealth Management Ltd. For comments or questions Stuart can be reached at stuart@precisionwealth.ca or 250-954-0247.