Sep 08, 2022
What if no one wants to be the executor of an estate?
Being an estate executor is a tough but necessary job. But when no one is willing to take on the role, there are a couple of alternatives available.
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When we talk about estate planning, we’re not just talking about writing a valid will and keeping it up to date (although that’s important too!). Estate planning is difficult for many to think about, since we understandably don’t like thinking of a time when we may no longer be around. Perhaps estate planning even feels actively morbid to you.
But we’re here to tell you that carefully planning your estate is one of the greatest gifts you can give your loved ones. Once you’re gone, they’ll have to sort through your belongings, your assets, and your debt, and perhaps even go to court and deal with high fees and bureaucratic hurdles. Leaving behind a thoughtful estate plan that you’ve discussed beforehand with your loved ones will ensure that they won’t be burdened with unnecessary stress during an already difficult time.
An estate plan is a dynamic and ongoing process that’s meant to ensure that all of your assets are transferred as seamlessly as possible to the person or people of your choosing, with minimal fees, taxes, and time lost to bureaucratic mazes. A good estate plan is always highly personalized to you and your family and loved ones, and everyone’s ideal estate plan is going to look a little bit different.
However, they mostly share the same goals: Reducing the need for probate or even aiming to skip it entirely, strategies to reduce fees and taxes so more of the estate is left for beneficiaries, and ensure that beneficiaries have access to their share of the estate as soon as possible.
Estate plans will often also include precise instructions for funeral arrangements, or perhaps even have some sort of pre-arrangement made with a specific funeral home in order to lock in a specific price.
While it may seem daunting to start something as important as an estate plan, the truth is it all begins with an honest conversation with your loved ones. Make sure they know that you’re thinking of creating an estate plan, and keep them involved in every step of the way. Maintain transparency and patience. This will ensure that your loved ones will be in the loop when the time comes, and will be able to execute your wishes and directions confidently. These conversations are also a good opportunity to discuss the role of estate executor with your loved ones, and determine who would be able to take on this important role.
Once you’ve covered this emotional ground, it’s time to get into the nitty-gritty of creating an estate plan. Here’s where to start:
You can’t create a solid estate plan without knowing how big your estate is. This means that your first step will consist of creating an inventory (and an approximate value appraisal) of all of your assets. These assets include:
Personal property, such as clothes, books, family heirlooms, and furniture;
Vehicles, such as cars, motorcycles, or boats;
Financial accounts, such as chequing, savings, and non-registered investment accounts;
Retirement accounts, such as pensions, TFSAs, and RRSPs;
Life insurance policies;
Valuables, such as jewelry, antiques, and rare collectibles;
While creating this inventory, it’s also important to keep an eye on any ongoing debt you might be accumulating. Mortgages, credit card debt, and student loans are all going to have to be paid off sooner or later. When you’re gone, that money will come out of your estate; your beneficiaries will only be entitles to whatever’s left.
If you have specific wishes for how you’d like your funeral service to be conducted and how you’d like your body to be put to rest, then it’s important to have those plans in writing in your will.
However, savvy planners go one step further and already make pre-arrangements with the funeral home of their choice, ensuring that they’re locking in today’s prices and get exactly the kind of service they envisioned. Furthermore, prepaying for a service with a specific funeral home takes a huge load off of your loved ones’ shoulders once you’re gone. They won’t have to pay for the service at potentially inflated prices, and won’t have the added stress of organizing everything since it’s already been sorted in advance.
Your will should cover all of your assets and, if possible, assign beneficiaries to them. Your will should also include your funeral plans and any other plans you want to be carried out in your name, such as donations to charity or pet care for any pets that may outlive you.
You can read more about creating a valid will in Ontario here.
Setting up a life insurance policy is another tool in your arsenal toward creating a comprehensive estate plan. The general rule of thumb is to look for a policy that covers about 80% of your annual income, projected for the next ten to twenty years. If you have a life insurance policy in place, not only will the funds in that policy go to your named beneficiaries after you pass, but those funds will also be tax-free. This means that your loved ones will receive immediate financial assistance after you’re gone, without having to go through probate to access the funds.
Furthermore, the funds from a life insurance policy can be used to offset any taxes or debts your estate may have once you’re gone. Since the money in the policy goes straight to a named beneficiary, it’s not considered part of the estate and can be used to pay off the taxes your estate would have to pay if it earned capital gains, for example. This way, less of your loved ones’ inheritance is lost to fees and taxes.
If you have assets outside of Canada, an estate plan that covers these assets is particularly important since out-of-country property can complicate probate proceedings. The property you own outside of the country is subject to the jurisdiction of the country where the property is located. So if you own a house in the United States, then that property may be subject to U.S. estate tax.
It’s always important to keep informed about the inheritance and estate laws of the country where your property is located, and plan accordingly.
Estate planning requires you to have a lot of important documents that are kept in a safe space, and are accessible to your loved ones when they need them. Here are some of the documents that form part of any solid estate plan:
As mentioned above, a valid will is the cornerstone of any good estate plan. Your loved ones will need to show your will to the probate court in order to be able to execute your wishes and receive the inheritance you’ve determined for them.
A living will is also known as a personal directive, and this is a legal document that outlines your instructions for your healthcare and personal care in the case that you’re incapacitated and can no longer advocate for yourself.
While it’s easy to confuse a living will with a POA for personal care, there is a key difference. While a living will establishes specific directions for your care when you’re no longer able to express them, a POA for personal care gives someone else the authority to make healthcare and personal care decisions on your behalf when you’re no longer able to. This means that instructions don’t need to have been written down ahead of time by you; a POA means you’ve given a person of trust the authority to make decisions for you, whatever those may be (as they’re related to healthcare and personal matters).
A POA for property gives someone you’ve designated as your “attorney” the power to deal with the sale, purchase, and management of all your financial assets, including real estate, in the event that you become incapacitated.
You can read more about POAs in Ontario here.
Creating a comprehensive estate plan can feel overwhelming, but it doesn’t have to be. Our dedicated professionals can assist you at every step of the way and ensure you leave no ground uncovered. That way, you can rest easy in knowing that you’ve given your loved ones a wonderful gift: The gift of planning ahead.
Get in touch with our professionals today for a free consultation and find out how we can help you create the best estate plan for you and your family.
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