As you get ready for your retirement, it’s a good time to update your estate plans. With proper planning, you can ensure your assets will be given out according to your wishes in the most tax-efficient way. This is especially important if you have a lot of savings and property, or a complex family situation.
Three steps to taking care of your future
1. Review your goals for your estate.
The goals for your estate may change when you retire. It depends on your age, the ages and financial needs of your family members, and the value of your estate. A good estate plan will help ensure that your wishes are known and honoured.
Examples: Provide income to loved ones; support a favourite charity; reduce taxes on the assets you want to pass on.
2. Review your current plans.
- Do you have an up-to-date will, a living will, and power of attorney? What will happen to your assets after your death? You want to make it as easy as possible to settle your estate quickly after you die.
- Will you have enough money to pay off your debts after your death? Will your assets cover the costs of settling your affairs? For example, an average funeral costs between $3,500 and $7,500. There may also be probate fees to process your will. If you can’t cover these costs through your estate, the burden will fall on your loved ones.
- How much tax will your beneficiaries have to pay? Will there be any probate fees on your estate? There are ways to reduce these costs.
- Have you named beneficiaries for your insurance plans and retirement accounts? It’s not always wise to leave the money to your estate.
- Do you have enough life insurance? The answer will depend on your personal situation and how many people you need to take care of financially after your death.
3. Consult an expert.
A qualified lawyer or financial adviser can help you create a legal will, a living will, and a power of attorney. Once you have these plans in place, review them regularly to ensure they still reflect your wishes.
Remember: If you don’t have a solid estate plan, you may leave your loved ones with unexpected financial and legal problems
If you have a lot of assets, or a complex family situation, you will likely need professional help.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.