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March 18, 2001--Estate
planning is the process of developing a comprehensive
personal plan that preserves your family wealth
and distributes it to your family members according
to your unique wishes. A well thought out estate
plan ensures that your family is cared for should
anything happen to you.
I begin with this question of all my clients,
"What is important about estate planning to you?"
- Is it the preservation of your current wealth?
- Is it providing for your spouse and dependants?
- Is it enjoying more quality time with your
family?
- Is it the orderly transfer of your family
business?
- Is it minimizing your estate and income taxes?
- Is it funding education for the children or
grandchildren?
- Is it leaving a legacy to a charitable cause
and to your loved ones?
Once your objectives are established, you can
begin drafting your estate plan that reflects
your particular wishes. Developing your estate
plan can be a significant commitment.
Make a detailed list of all of your assets and
liabilities.
- Review the capital gains or losses for all
your assets, and your desire for the disposition
of each.
- Decide whether to leave your estate to family
members upon your death either outright or by
testamentary trusts, or whether a portion of
it should be dealt with while you are living.
- A variety of trust vehicles, such as alter
ego trusts or joint spousal trusts, may accomplish
your goals while living.
- If succession of a family business or farm
is important, review the application of an estate
freeze along with the utilization of the $500,000
capital gain exemption.
- Review the granting of enduring powers of
attorney and how the Representation Agreement
Act of BC may affect your situation.
- Review any special needs for your spouse and
dependants.
- The appointment of capable executors and trustees
is important. They have the same powers as you
do in dealing with your accumulated wealth.
- The appointment of guardians for minor children
is essential. Your guardians and trustees may
have to perform for up to 18 years, or longer,
depending on the age of your minor children
and the time frame to windup the trust.
- Consider appropriate beneficiary designations
for your RRSP, RRIF, RESP, DPSP, employer pension
plans and life insurance policies.
- US citizens living here and Canadians who
have holdings in the US should review the US
estate tax treatment they face upon death.
- Review the implications of individual or joint
ownership of assets for tax and probate purposes.
- Review your family's need and ability to maintain
the current lifestyle if something happens to
you.
The cornerstone of your estate plan is a well
crafted Will. This document should be reviewed
periodically as legislative changes and personal
life events can alter your objectives. Your Will
should provide a framework to distribute your
assets to your named beneficiaries in a timely
and tax-effective manner.
If you die without a Will, your assets will be
divided according to BC's provincial legislation.
This situation can result in a loss of control
of assets. It may also necessitate incurring additional
fees and time to settle your estate.
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