Column: Demystifying the estate plan

Eccentric American billionaire Howard Hughes died in 1976 without a legal will. After very lengthy legal proceedings, the estate was divvied up among his 22 cousins. Not sure if that was his intent.

A 2018 Angus Reid Institute poll found that only 51 per cent of Canadians have a legal will but only 35 per cent say that their will is up to date. With estimates of at least $1 Trillion of Canadian inheritances passing to the next generation this next decade, that’s a lot of money transitioning without a clear plan!

Are you in the same boat?

Estate planning is not just about drafting a will. It is more about your life and your legacy – while you are living and for many years thereafter.

Everyone with a beating heart knows that they want to anticipate and arrange the management and transition of their wealth during their life, in event of incapacity, and after death. What’s needed is a framework for taking action. Here are six major areas of estate planning and the issues you will want to address:

Health Care

Whether you are in good health or not, your estate plan needs to prepare your family and friends to understand the role you hope they will play when you are in need.

Taxes

Most of us know the taxes we pay on a yearly basis. We often forget the silent lien on our estates that is triggered when we die. This can involve taxes on RRSP/RRIF balances, embedded capital gains and recaptured depreciation that we may have claimed on taxable capital property. Steps must be taken to anticipate these taxes and have a plan to assure they get paid when we die.

Litigation

If your will excludes or fails to make adequate provision for a beneficiary, expect your will to be contested. There are many cases where dividing an estate in a truly equal way may be difficult or impractical. The important thing is to clearly communicate with beneficiaries ahead of time and invest in proper legal advice and documentation to make your wishes clear.

Communication

Lack of communication is the greatest reason for nasty estate disputes. Because it can be difficult to have this conversation, it is a good idea to have a family meeting moderated by an independent third party. A Certified Executor Advisor or your lawyer can be a great resource.

Planning

The biggest question we can ask in the estate planning conversation is “how do you wish to be remembered?” Without a financial plan that incorporates estate planning, you run a high risk of excessive taxation, litigation and family animosity. The result is that your legacy could be seriously compromised. No one wants that.

Governance

For your estate plan to come alive, it must be put into writing. Without regular review of your estate plan, wills, powers of attorney, representation agreements or advance directives, things can get ugly.

Too often we focus our energies on trying to figure out how to solve the estate planning puzzle. Instead, ask who can help you through this process. Find a qualified guide with a comprehensive estate planning process and, together with your family, start the conversation.

Richard Vetter is a Certified Financial Planner, Certified Executor Advisor and owner of WealthSmart Inc.