Ensuring the orderly and appropriate distribution of assets

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Virtually every Canadian has an estate made up of everything they own. Some are extremely large and valuable; others are more modest and may be little more than personal possessions and some savings.

But regardless of the size, having a plan that sets out what should happen to your estate when you pass on means surviving family members have a clear picture of your final wishes and aren’t left wondering what to do with your assets or how to take care of people you may have been responsible for.

An estate plan is more than a last will and testament, although it would typically include a will and perhaps a financial plan as well, according to professional estate planners.

Rachel Blumenfeld, a partner with the Toronto law firm Aird & Berlis, advises clients on estates, tax and succession planning matters. She says an estate plan is a ‘big picture’ that typically includes a will, powers of attorney, and financial and retirement planning.

“An estate plan sets out what you are trying to achieve, which should be preserving assets during your lifetime, making sure they get transferred to beneficiaries in an orderly and tax-efficient manner, whether it’s during your lifetime or on your death, and to ensure the continued preservation of assets in the hands of beneficiaries,” she says.

An estate plan can also avoid complications if you leave behind minor children or have had a second marriage, adds Ms. Blumenfeld.

“What we are starting to see more and more is married couples separating and not divorcing, but then getting into relationships with other people. Then, even if you have only a few assets, not having an estate plan leaves your remaining family very exposed,” she says.

Ms. Blumenfeld also points out that estate planning is not only meant to leave your affairs in order when you pass on, but also has an important role to play if you become incapacitated or disabled.

“An estate plan should include a power of attorney, which allows you to choose who is going to be the decision maker for you if you can’t make decisions yourself,” she says.

Chris Ireland, senior vice-president, planning services at PPI Advisory in Vancouver, says while estate planning is usually seen in the context of an orderly and appropriate distribution of assets when you pass away, it can have a wider application as well.

“Estate planning should include managing your assets and working with other family members to do so, and possibly distributing some of your assets while you are still living,” he says.

Mr. Ireland agrees that estate planning is important regardless of the size of a person’s estate. Having a will alone may not be enough in some circumstances.

“For example, you may have a disabled child or spouse and want to make sure they are provided for while you are alive, perhaps through a trust, which would be part of your estate plan,” he adds.

Mr. Ireland believes estate planning should begin as early as possible and recommends that the plan be reviewed and updated if necessary whenever there is a major life event such as marriage, divorce or the birth of a child.

Ms. Blumenfeld agrees.

“We generally see people getting concerned about estate planning when their life changes, especially when children come along and parents want to make provision for guardianship for their kids. And again, even if you don’t have many assets, if you are working you may have a pension fund or group life insurance, and you will want to make sure it’s going to go to the right place,” she says.

Ms. Blumenfeld and Mr. Ireland also agree that choosing an estate planner with appropriate knowledge and education is important. While Ms. Blumenfeld is a lawyer and Mr. Ireland a Chartered Professional Accountant, both are accredited Trust and Estate Practitioners (TEP), a designation awarded by the Society of Trust and Estate Practitioners (STEP).

“You certainly want to deal with someone who has experience in the area and who has credentials,” says Mr. Ireland. “The TEP designation is very important because it signifies knowledge and experience in estate planning.”

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