Many Manitobans worry how they can leave a financial legacy to their family without causing headache, frustration, or harming relationships. If you’re thinking about the latter, here are a few strategies to smooth out your estate and legacy plans:
- Not All Assets Are Treated Equal. Far too many wills are drafted to leave equal amounts of assets to each beneficiary. Worse yet, some leave assets of similar pre-tax value to each beneficiary, without adjusting for the Canada Revenue Agency’s share. Let’s start with the former scenario and ask the question “does everyone want to inherit an equal share of everything?” Maybe one child is extremely fond of the family home or cottage while another lives out of province. Distributing physical assets proportionately, in this circumstance, may not leave everyone feeling they’ve been treated fairly. In our second scenario, it’s imperative to adjust assets for the net value, after accounting for taxation. A registered retirement savings plan (RRSP) portfolio is taxed far more heavily than a rental property, which is taxed differently than a personal residence. Consult with your financial planner, accountant and estate lawyer to identify the true, after-tax value of everything you own to deploy truly equitably!
- Know What Will and Won’t Be Subject to Probate. The process of probating an estate can be lengthy and expensive, especially as the estate becomes more complex and more parties are involved. Imagine spending months or years in and out of courtrooms and lawyer’s offices trying to wrap up affairs that could’ve long been put to rest. Sounds horrible, right? Well you can reduce the complexity of an estate and bypass probate by assigning named beneficiaries wherever possible. Named beneficiaries have a direct claim to their share of the asset outside of the will and estate, avoiding the probate process and expediting closure.
- Talk Your Wishes Through with Your Family. An estate planning conversation with your loved ones is never easy. No one enjoys the topic of death and money; but this is a chat you really NEED to have. Outlining your wishes, not just on paper, but in the right setting with your heirs can save a lot of grief. It gives everyone an opportunity to ask questions, voice their opinions, and understand the decisions you’re making. Having this conversation early will help keep your family together when the challenging times come.
If you’re the kind of person who wants to take care of their family long after you’re gone, these are some great starting points. Understand what you own, how it’s valued in an estate and how your family emotionally values it. Talk through your plans with your family to put any notions of unfairness to rest and be sure to work with experts to transition those assets in an efficient manner. If you follow these steps, you’ll surely build a legacy that transcends time and money!
Recent Comments