Estate planning is not just for the very wealthy. It is important and beneficial for everyone.
You may be wondering, why is estate planning important, regardless of financial status? Because it provides a variety of benefits for you and your loved ones and protects the assets you accumulate in your lifetime. A good estate plan can save you and your family members an enormous amount of time, money, and stress.
Estate planning involves creating legal documents that set out your instructions so your loved ones don’t have to guess about your final wishes or your personal wishes should you lose capacity during your lifetime. Estate planning can also help preserve and protect your assets during your lifetime and after your death. Here are some of the top benefits of estate planning.
If you die without a Will, a law created by the BC government decides who inherits from your estate and in what amount. That means the people who inherit may not be who you would have chosen as beneficiaries if you prepared a Will.
When you prepare a Will, you can set out detailed instructions about who should inherit, how much they should inherit and when they should receive their inheritance (especially important if you have small children or relatives who aren’t good with money). In addition to naming your beneficiaries, you can also appoint a guardian for your minor children, gift special or valuable items to certain people (e.g. heirlooms, art, jewelry), and set out your wishes for your funeral.
When you prepare a Will, you get to choose your executor. Your executor is the person you want to handle your estate. If you don’t have a Will in place, your family will have to go to court to appoint an administrator of your estate. This costs extra time and money and delays the distribution of your estate to your beneficiaries. And at the end of the day, the person appointed may not be who you wanted to administer your estate.
A good estate plan should include documents appointing substitute decision makers who can act on your behalf if you become ill or injured. If you have an Enduring Power of Attorney and a Representation Agreement in place, the person (or people) of your choice can make decisions on your behalf.
An Enduring Power of Attorney gives you the power to appoint a person you trust to handle your financial affairs if you can’t. A Representation Agreement gives you the power to appoint a person to make personal care and health care decisions on your behalf if you can’t (this is sometimes called a living will or healthcare proxy).
If you don’t have these documents in place, your loved ones will have to apply to the court to be appointed committee of your person or of your estate. These court applications are expensive and can cause delay in handling your financial affairs and health care needs.
If you die without a Will or become incapacitated without an Enduring Power of Attorney or Representation Agreement in place, your loved ones may argue over who should control your estate, your finances, or your health care decisions. If their dispute is particularly contentious, they may end up pitted against each other in court.
Family conflicts are especially common in blended families/second marriages. When you put an estate plan in place, it reduces or eliminates the potential for disputes among your family members.
Estate planning offers a number of tools to provide for dependents such as small children and disabled family members. For example, you can appoint a guardian for your small children should you die before they turn 18. If you don’t name a guardian in your Will, the courts will decide the fate of your minor children. You can also create a trust in your Will stipulating who should handle your children’s inheritance and at what age they should have access to their inheritance.
If you have a disabled relative, your estate plan can include a disability trust to provide for their financial needs. The money you put in the disability trust can be used for your loved one’s housing, food, medical and other costs. They can remain eligible for financial assistance and special services from the provincial government if certain restrictions and important considerations are observed in establishing the disability trust (also known as a Henson Trust).
Good estate planning will minimize tax liabilities. There are legitimate ways to structure your affairs to reduce the tax burden on you and the ultimate beneficiaries of your estate, including trusts, transferring bank accounts and property into joint tenancy, dual Wills, using beneficiary designations in investment accounts and life insurance policies, and giving assets away during your lifetime.
A good estate plan can also help reduce or avoid other costs such as probate fees, estate taxes, and legal fees. Spending money now to get a comprehensive plan in place will save you and your loved ones many times over in the long run.
A comprehensive estate plan is the best way to maintain privacy for yourself and your family. Most Wills have to go through the probate process which is public. There are ways to structure your affairs so that probate is not necessary for all of your assets (e.g., use of multiple Wills, establishing trusts, transferring bank accounts and property into joint tenancy).
Court applications are public. If you don’t have an estate plan and your loved ones have to apply to be appointed committee, to administer your estate, or to start estate litigation, it all plays out publicly.
Estate planning tools can be used to preserve your assets during your lifetime, protect your assets after your death, or both. There are so many options to explore, including alter ego trusts joint partner trusts, and use of dual Wills (also known as multiple Wills). You can create trusts during your lifetime or in your Will if you have concerns about how a beneficiary handles money (e.g., a sibling who is bad with money) or want to ensure that your child doesn’t have access to their inheritance until a later age to keep them from wasting it.
You may at this point be wondering, is it better to have a Will or a trust in Canada? An experienced estate planning lawyer can help you strategize and decide which estate planning tools are best to achieve your goals.
If you are a business owner, estate planning experts can help you get a succession plan in place. Whether you want to transfer your business to a family member, employee, or friend, or want to sell your business to a third party on the open market, a succession plan will help ensure it goes smoothly.
A clear business succession plan will allow you to make crucial decisions about ownership, maximize your company’s value, and take advantage of tax strategies. Your succession plan should include your exit strategy/retirement plan as well as a contingency plan to ensure your business survives if you die, become ill, or get injured.
Do you want to leave some or all of your estate to charity? With the right expertise, charitable donations can be arranged as part of your overall estate plan. This allows you to achieve your philanthropic goals and can also create tax benefits for your estate.
Once your estate plan is in place, you will gain confidence and peace of mind. Estate planning ensures your affairs are in order and you are ready come what may. It is never to early to start. You can update your estate plan in the future as your wants, needs, or circumstances change.
Estate planning is important, and the estate planning process can be surprisingly easy when you have advice from the best lawyers. Whether you are new to estate planning or have estate planning documents that need updating, contact the passionate and knowledgeable estate planning lawyers at Onyx Law Group today. We pride ourselves on providing clear legal advice and personalized estate plans to suit your needs.
Onyx Law Group represents clients in family law, estate and trust litigation, estate planning and probate matters. Consult with our experienced team at