Many years ago, you may have agreed to be a family member or friend’s executor when they drafted their Will. Well, the time has come, the individual has passed away, and you are asked to preform your duties as the executor of the estate. Where do you start?
In a previous newsletter we pointed out the glaring fact that less than 55% of Canadians have a valid Will, and an even smaller percentage have a Representation Agreement and Power of Attorney.
A common misunderstanding is that POAs are only for seniors, but this is inaccurate as a POA is a solid financial tool that any adult can benefit from.
As a financial advisor I am often asked if a future death claim payout to a client’s beneficiary can be structured so that it is not paid out as a lump sum.
Parents, and sometimes grandparents, may be concerned that the inheritance if taken as a large lump sum may put the child at risk for several reasons:
Over the years I have reviewed a handful of my client’s RRSPs who had their assets with one of my competitors, and several times I have been shocked with how poorly it was communicated to the customer how important the beneficiary selection is.
In the last year a long-time senior client of mine sadly died unexpected and had two RRIFs. One with me showing his spouse as beneficiary (as Successor Annuitant/Owner) and the second with an online self service provider with his “Estate” as beneficiary.
It has been estimated that close to two trillion in intergenerational wealth transfers will occur in Canada over the next decade as Baby Boomers glide through their “golden years”. A massive shift of capital will flow through to the “Boomers” and then again to their children or another family member at death.
The key to maximizing any inheritance (either to be received or to be gifted) is to ensure taxes and estate administrative costs are kept to a minimum, specifically by avoiding the process of probate if possible.
Draft a Will
Dying “Intestate” creates legal and financial obstacles for your family, something which could easily be avoided with a Will.
By not having a Will the government will use a default selection, stating how assets are to be split between your spouse and children
After a loved one dies, paperwork is the last thing on anyone’s mind.
Estate at Ease, offered through Canada Life makes this easier.
Managing a loved one’s estate can be an additional stress for executors who are already grieving a loss. Estate at Ease™ estate documentation and identity theft protection service can alleviate some of this burden. It’s an opportunity to help your client’s beneficiary in their time of grief.
As financial advisors, we are often asked about the importance of an up to date Will, Power of Attorney and Representation Agreements. Shockingly 56% of adult Canadians do not have a current or valid Will, leading us to recommend updating these documents, along with a discussion on who should be considered as the Executor.
In times like these, many charities are facing difficulty raising funds for our communities. Perhaps you are an individual who would like to make a meaningful donation to your favourite charity or non-profit society, but your monthly cash flow does not allow it.
It has been said that a Will is the last message you will leave your family. Having a Will can provide clear direction as to what your wishes are and who will get what. Die without a Will (known as dying intestate) and chaos will likely be the result. Having a Will allows you to provide for certainty instead of chaos.
Most of the reasons to have a Will have to do with what happens if you don’t have one and that often will depend on what province you reside in. Each provincial government has its own Wills and Estate legislation which also provides for the rules regarding intestacy. The following are some of the reasons to have a Will and what could result without one.