Bennett Financial Services

Estate planning is important in order to ensure an orderly transfer of assets from yourself to the surviving partner and children; to minimize probate time, to minimize the cost and trouble of settling your estate; to avoid possible creditor claims; and to maximize the assets and income transferred to your spouse and children.  It is advised that you hire a lawyer who specializes in this area to assist you in this process.

From a tax point of view, the Canada Revenue Agency assumes that at the time of death the deceased ‘sold’ all of their assets.  As a consequence, any taxes on capital gains accrued on assets ‘sold’ at that time will become due upon the settlement of the estate.  In addition, a final tax return will have to be prepared that will account for this income and any other salaried, interest or dividend income.

The steps involved in achieving the above objectives include organizing your records to ease the burden of those settling your estate; preparing and updating your will to ensure your wishes are carried out; purchasing the appropriate amount and type of insurance to cover funeral expenses, pay off debts, provide some transition money for your family while the estate is being settled and finally to pay off any taxes owing so that precious assets do not have to be sold; establishing joint tenancy to remove some assets from the above process;  designating beneficiaries to reduce probate fees; and gifting money and other assets prior to death.  In larger and more complex estates, this may also involve using incorporation of a family company to freeze asset and reduce taxes while assigning control according to the deceased’s wishes.  In addition, it is often advantageous to use any one of a variety of trusts to achieve the above objectives as well as to protect the future interests of your loved ones.

While the procedures of estate planning are complex, if you have a better understanding of the concepts involved and if you have already made the necessary planning decisions that will be required by your lawyer, you will save your lawyer a lot of time and yourself a lot of money.

For a clear understanding of the terms being used, the issues involved, the necessary steps to be taken and for a step by step check-list procedure of how to adequately plan your estate and thus to minimize your costs in this process read the chapter on ‘Estate Planning’ in Bennett Financial’s ‘Checklist Guide to Financial Independence’.  To get a copy, click here.