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Tips on Estate Planning
What’s the state of your will?
Whenever Aretha Franklin took the stage, her handbag was always nearby. As the story goes, she insisted on being paid before each show and wanted to keep the money within eyeshot. Sadly, she didn’t pay as much attention to her estate.
More than a year after her passing, the Queen of Soul’s estimated $80-million fortune remains in limbo, all because she never crafted a will. More than half of Canadians could find themselves in a similar situation one day. Did you know 51% of Canadians say they don’t have a will, while only one-third (35%) say they have one that is up-to-date?1 Hopefully, you’re not one of these individuals because, whether your estate is simple or complex, a will is important.
Here are 3 things to consider when planning your will.
Avoid the default estate distribution
If you don’t have a will, every province and territory has laws that set out who will inherit your assets. “If you die without a will, your estate will be administered in accordance with these laws. This essentially leaves crucial aspects of your estate to be dealt with based on what was decided by the government,” says Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Private Wealth Management.
Typically, the distribution of your estate ends up being based on family ties and may not be what you wanted. This might create tension in your family and expose your estate to litigation, which might tie it up for years.
Set it, but don’t forget it
If you’ve made your will, that’s great. However setting it and forgetting it isn’t the best strategy. Throughout your life, you’ll experience events that may give you a reason to rethink your goals for your estate. For instance, the birth of a child, a marriage or a large windfall are all examples of life-changing events that may require you to rethink your will. Changes to your assets, outstanding liabilities or relocating to another province or country are other factors that you may need to reflect in your will.
In a lot of ways, your will is simply a snapshot of your assets and wishes at a point in time. Years after drafting one, you may have named beneficiaries on insurance policies and registered assets that conflict with your will.
You can update your will by adding an amending document called a codicil or preparing a new will, if necessary. Typically, a codicil is used to make minor changes to an existing will, such as naming a new executor. On the other hand, major changes may require the preparation of a new will.
Your priorities may change over time, so check in on your will occasionally to identify potential complications and ensure your named estate representative and beneficiaries still match your wishes.
Did you know?
As a result of COVID-19 and social distancing measures, changes were recently introduced to make it easier to execute documents. For instance, virtual witnessing is now available for wills and powers of attorney (POAs) in Ontario and on POAs in Saskatchewan. Check with you lawyer to sign these documents in this manner. These changes are only in effect during the COVID-19 emergency period.
Administering an estate is a big responsibility
Being an estate representative and administering an estate can involve dozens of responsibilities, including making funeral arrangements, closing bank accounts and notifying beneficiaries. Even when everything goes according to plan, it typically takes between 12 to 18 months to complete all the tasks.
Friends and family are often tapped with this important job without considering if they’re up to the challenge. When you name a friend or family member as your estate representative, you need to consider how old they are — especially if you’re both in the same age bracket. It’s essential that your estate representative is able to act on your will when called upon, which may not be the case if the named estate representative is the same age or older.
Choosing who will act as your estate representative can be as tough as writing the will itself. Don’t let this prevent you from completing your will. If you can’t decide who to name as your estate representative, a professional, like CIBC Trust, could be an option. CIBC Trust can help minimize taxes on your estate and identify errors. It also has experience dealing with lawyers, accountants, financial institutions, insurance companies, government and beneficiaries who may be located all over the world. This option ensures you have a trusted and experienced professional administering your estate and may help reduce the stress of choosing an estate representative. CIBC Trust can also act as an agent for your estate representative and look after various administrative tasks to help your estate representative carry out their role.
If you don’t have a will, you’re giving up your right to decide what happens to your estate. Everyone’s situation is different. Contact us if you have estate planning questions or would like more information about how CIBC Trust can help you. We can also help you decide how often you need to review your estate plan.