Invest Well. Live Well: Fifteen tips for estate planning

My father-in-law, Bryan, had two main loves in life: his family and golf. Sadly, a few years ago, he was diagnosed with terminal cancer and was gone within a few weeks. He left this world too soon, but lived a good life with no regrets.  

Before Bryan passed away, my in-laws asked me to review their finances to help ensure a smooth transition. I took this as an honour. This process can feel overwhelming when already dealing with a loss. I would like to share some strategies that might help your family with their estate plans: 

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1) Have your will reviewed every five years or after any major life event (marriage, divorce, birth of children, etc.). 

2) Ensure your executor is willing and able to look after your estate and knows where to locate the will or has a copy. 

3) Ensure powers of attorney (POA) are in place. POAs allow a trusted person to act on your behalf if you are unable. For example, they could pay your bills, complete your taxes or pick up your mail.

4) Set up a living will that indicates which medical treatments are acceptable. In absence of this document, medical staff will take direction from the family, which can lead to possible conflict.  

5) Appropriate assets should be in joint names, namely bank accounts, investments, vehicles, safety deposit boxes, household bills, etc. This can help ease the transition, ensure no bills lapses and avoid probate.

6) There are some instances in which joint ownership may not make sense; for example, adding your adult child to the title of your primary residence could jeopardizes the asset in events like marital breakdown, business failures or personal lawsuits. In addition, you could lose some of the tax-free capital gain allowance.

7) Have beneficiaries on retirement saving plans, retirement income funds, tax-free savings accounts, insurance and pensions. Sometimes it is wise to name your estate as beneficiary so the executor can apply the will, facilitate distribution and pay taxes.

8) Spouses should be designated successor annuitant for TFSAs so they can retain the values in their tax-free savings account. 

9) Because all immediate family members are given a copy of the will, it is best to communicate your general wishes in advance to help ensure that there is no confusion.  

10) Create a financial inventory and attach it to your will, including the location of keys, safes and safety deposit boxes. 

11) Ensure book values (original costs) are known for tax purposes with respect to investments and real estate.

12) Since there are no taxes on gifts to adults, consider gifting to loved ones as a pre-inheritance. 

13) There are significant tax breaks for the philanthropic. We encourage people to donate while they are alive so the charity can thank them personally. It also helps promote the virtue of giving. 

14) Insurance helps replace income, pay taxes and can be particularly useful for blended or complex families because it is paid out quickly, tax-free and privately (outside the will). There are additional opportunities for incorporated businesses. 

15) Establish trusts to help minimize tax, avoid probate, ensure proper distribution of assets, provide income and retain privacy. 

The above is not an exhaustive estate-planning list. Because every family has different dynamics and values, we strongly recommend you seek professional guidance in building your estate plan. 

"In golf, as in life, it is the follow-through that makes the difference.”
— Anonymous

Stay safe and, until next time, Invest Well. Live Well.

Written by Eric Davis. This document was prepared by Eric Davis, vice-president, portfolio manager and investment advisor, and Keith Davis, investment advisor, for informational purposes only and is subject to change. The contents of this document are not endorsed by TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc.-Member of the Canadian Investor Protection Fund. All insurance products and services are offered by life licensed advisors of TD Waterhouse Insurance Services Inc., a member of TD Bank Group. For more information, call 250-314-5124 or email Keith.davis@td.com.

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