Estate planning may not save lives, but it provides important benefits.
Your estate plan makes a difference to the people you care about. You can also benefit your favourite charitable causes.
Today, I’ll cover the three key benefits of estate planning.
1. Estate plans provide protection
Your spouse and children will need you to protect them when you are gone.
Having a professionally prepared will provides a proper transition for your loved ones. You can make sure they remain in their home, fund their education or pay off a mortgage.
Do you believe you don’t have enough money to achieve such goals?
Life insurance can create an instant estate to satisfy your wishes. Tax-free life insurance benefits play a key role in everyone’s estate plan.
You can also, inexpensively, create a trust in a professionally prepared will. Setting up a trust is a complex tax and estate tool. It is not a project for a do-it-yourself will kit.
Trustees or executors named in your will can manage inheritances for:
- minor children;
- a second spouse in a blended family situation; and
- a spendthrift beneficiary unable to handle money.
Are there charitable causes that depend on you? Your charitable donation can help a local shelter save animals. Cancer, heart and stroke research and foundations also rely on your donations.
2. Estate plans reduce expenses
On top of that, you can minimize some income taxes your family would otherwise have to pay. Using your RSP or RIF to donate, you can save taxes on your registered plans. You can also receive a tax credit. You’ll need professional advice on the tax rules that apply to you personally.
A proper estate plan will transfer your money to loved ones at a low cost. Your plan can reduce or eliminate probate costs, income tax and legal fees. This trio can otherwise devour a small estate.
Do some homework for your estate plan. You will need professional advice. Don’t rely on tips from a bank teller or your beer buddies.
You can find low-cost ways to transfer ownership of your assets. This can help avoid probate. You’ll leave more money for your loved ones. Probate of a simple estate can take 1-3 years. Imagine the substantial saving of time and expenses proper transfers can achieve.
3. Estate plans put the right person in charge
You choose who is in control of your estate. Do not assume your family will know what to do if you are suddenly out of the picture.
You must name an executor or estate trustee in your will. This person will be in charge, so choose wisely. You can authorize someone to operate your business. You can spell out who sells it or continues to operate it.
What if you don’t have a great deal of money, property and assets? You can still benefit from having an estate plan.
Your plan should include, at least, a will and powers of attorney.
You name a person authorized to close your bank accounts, pay for your funeral and deal with your final tax bill.
Powers of Attorney for Property and Personal Care can protect you and your money while you are still alive.
Get these legal documents for your estate plan. You will have your own lifebuoy.
Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of Executor Kung Fu: Master Any Estates in Three Easy Steps. Visit www.ExecutorSchool.com © 2013