Estate planning guide for seniors

Estate planning is about what you want for your life and the lives of your loved ones and what you hope for their financial future. It helps making the transferring of your assets after you pass away as simple and easy as possible.

It may be hard to think about, but it’s an important thing that we all need to consider. Getting your affairs in order now will give you (and those you chose as your beneficiaries) a clear plan for the future and allow you to focus on fully enjoying your retirement, confident that your wishes will be carried out.

First, make a list of all your assets including property, money and investments. You should collect the following documents:

• Bank statements
• Stock and bond certificates or log-in information to your brokerage accounts and statements
• Life insurance policies
• Corporate records if you own a small business
• Car and boat titles
• Property deeds

This part is probably the most intensive - especially if you haven’t organized this before or if your finances are complicated. Half the battle is done once you have all your documents in order. Once you have a comprehensive understanding of your assets, you can now move on to choosing an executor.

Choose someone you trust to be an executor, who is also responsible. An executor has to “execute” your wishes according to your will. If you do not choose one in your will, then your next-of-kin will likely be appointed to administer your estate. In this case, your estate will have to go through probate and your assets will be divided amongst your relatives according to the law in your province. You will not be able to assign specific assets to specific charities, friends or to give more to one relative than another.

Make sure to let the executor know you have chosen him or her so there are no surprises. You may find they might not want the responsibility of the job so keep a few alternates in mind.

It's important, even if you have a will, to name beneficiaries specifically in your investment accounts and pension, especially if you don't have a living partner. This will assign transfer of the assets upon your death and may help you avoid any probate fees.

For your investment accounts, there is usually a simple, one-page form to fill out and mail in. You can also consider adding the person to your account and make it joint. But it is important that you only take this step with someone you fully trust as they can then access the account anytime after they are added. Each registered account has different rules so you should consider speaking with an expert like a lawyer before taking that step.

Remember that your partner or spouse doesn’t automatically inherit your entire estate, so if you want to leave everything to them, make sure they are named.

Probate is when you apply to the courts to administer an estate. It's essentially a tax - usually 1.5% of your total estate plus several thousand dollars in fees, depending on your province.

Your loved ones likely won't have to deal with probate if you don't have significant assets or if all your bank accounts are joint.

Many assets do not require you to go through probate, such as:

• Jointly owned assets with a right of survivorship (where it is clearly established that the balance of a joint account would go to the living account holder)
• RRSPs, RRIFs, TFSAs with a named beneficiary
• Insurance proceeds paid to a named beneficiary
• Certain kinds of real estate
• Gifts made during your life
• Assets in a trust created during your lifetime

Your estate may have to go through probate in some situations, such as if you don't have a will (depending on your province) or if there are debates among your beneficiaries over assets.

You could also potentially avoid probate by gifting your assets while you're still alive. For example, you can gift stocks to a charity throughout your life or cash to your children to see them enjoy it now.

Now, for the most important step of estate planning -- creating a will. And yes - it's an absolute must to have a will. Sadly, the majority of Canadians don't have a will, mostly because they think it's too expensive to set up or they feel they don't need one.*

But a will doesn't have to be complicated or expensive. It simply sets out your wishes for your assets after passing. There are now some amazing online programs that allow you to create a formal will for between $40 to $150 dollars. You simply print it out, get two witnesses to sign it (who aren't your spouse or beneficiaries) and keep it in a safe place.

You can even technically handwrite a will with no witnesses, but this is not an ideal option because it's more likely to cause disputes. It's more of an emergency option.

If you don't want to go the DIY route because your financial situation is more complicated or you have questions, then seek out the help of a lawyer who can help walk you through the process.

A wills and estates lawyer can be invaluable in helping you plan out your will. You can meet with a lawyer and really go over your assets, your family dynamics, your relationships and your goals and wishes for your money. They'll help you figure out strategies to avoid probate if possible and give you advice you didn't even know you needed. For example, did you know that if you have young grandchildren under 18 you can't actually leave them property but have to instead leave it to them in trust? Or that you also need to include an ex-spouse if you still owe spousal support? Or what about how to deal with your condo in Florida? Most Canadians today will need, and want, the extra help figuring things out. A will with a lawyer can cost between $500 and $3000, which is likely worth it if it saves you probate fees and helps give you the security that your loved ones will be taken care of.

A power of attorney (POA) document gives the person, or persons, of your choice the power to manage your financial affairs. There are several different kinds of POAs, but for estate planning purposes, we're discussing a Continuing POA to act on your behalf even when you don't have the capacity to. The person you appoint as your substitute decision maker is called an “attorney” and they have the power to act as your agent for all sorts of essential tasks such as:

• Paying bills
• Filing tax returns
• Opening mail
• Banking
• Talking with accountants and lawyers
• Voting on your behalf

It's an important responsibility, so it’s important to choose this person carefully. But know that their powers do have some limits: your attorney cannot make a will for you, change your beneficiaries or create a new POA. This kind of attorney also cannot make healthcare decisions - that's a different document called a Health Care Directive or a Living Will.

You can assign an attorney while creating your will, both online and with a lawyer. There are also standalone documents available online.

As you are making plans for your and your loved one’s future, here's a checklist so you know you're not missing anything.

• Take inventory of your assets
• Name beneficiaries in investment accounts, insurance policies and pension accounts
• Add beneficiaries to joint accounts if it makes sense for you (Note: some joint accounts have rights of survivorship in them. Talk to your advisor about what works best for your accounts.)
• Create a will
• Plan and prepay your funeral
• Give out gifts while alive
• Set up a trust if it makes sense for your situation
• Make arrangements in case of incapacity (most likely by Power of Attorney)
• Review this plan every three-to-five-years to ensure it remains reflective of your changing circumstances and wishes
• If there are significant and complex assets and/or challenging family dynamics, consider an impartial third-party to act as your executor, such as a corporate trust company.