Planning your estate is not usually top of mind for most people but it’s important to get it done now, says Servus estate and trust specialist Dennis Trzok.
Trzok has advised just about every type of member, from young families living in the suburbs and families in rural areas that have older children at home, to middle-aged couples who want their loved ones looked after no matter what life throws at them.
“If you’re over 18, regardless of what you own, you need to start planning now. If something tragic happens to you, you don’t want your loved ones left scrambling during what’s already a terrible situation for them,” he says.
The first thing you want to do is find someone, such as your Servus advisor, to guide you through the process and review your priorities. Trzok shares tips you should consider for estate planning to give you peace of mind.
Estate planning tips
Get a lawyer.
Having a lawyer guarantees your will is done correctly and is legally binding. “It’s so much better to have one done by a lawyer rather than, say, a will that you do online,” says Trzok. Your Servus advisor can help you find one.
Choose an executor.
This person typically takes on the job of distributing the estate assets. “Don’t overthink it,” says Trzok. “You ideally want someone who is studious, organized and does not procrastinate.”
Get your documents in order.
Draw up all the documents you need, with the help of your expert team. You’ll want a will that names the executor(s), appoints guardianship of children or other dependents, names beneficiaries, outlines distribution of assets or any personal effects as well as funeral arrangements. You should also have powers of attorney for personal care and property.
Communicate your plans.
Let your executor and other involved parties know where to find the paperwork, which should always be kept in a safe place, and go over your plans with them.
After putting your estate plan in place it’s important to review it regularly. Trzok recommends doing so every four years or when there’s a major life event such as getting married or having a child or a death in the family. “The reason you want to review it regularly is that sometimes we forget what’s in there or even who we named as executor,” says Trzok. “You’d be surprised what people remember and forget about their will.”
Common estate planning myths
Sometimes what causes people to avoid or procrastinate planning their estate are misconceptions about the process or the documents themselves. Here’s the truth behind some of the most common estate planning myths.
1. The government gets all of my money if I die without a will.
Not true. In Alberta, if you die without a will, the provincial government has a standard one and your assets are distributed based on the formula that it provides. But, says Trzok, the province does not provide an executor – someone must apply for this role – and there is no guarantee that this distribution works for your family.
2. You should never name children as executors.
It depends on your children and their disposition, says Trzok. Are they organized and capable in terms of navigating potentially difficult family dynamics? Many people do name their children as executors and, if not their children, then other family members.
3. There is no point in even writing a will because someone can or will challenge it.
It’s true that anyone can challenge a will. For the challenge to be taken seriously, though, it must be a valid claim. Any claim made against an estate with no grounds in reason or evidence will simply fall flat or not even be taken up by a lawyer or the courts. So, it’s worthwhile to make a will. The vast majority of wills are valid and not contested.
4. A handwritten will or a will kit are good enough as legal documents and there is no need to visit a lawyer.
Absolutely not, says Trzok. When a lawyer completes the legal documents, you’re guaranteed they’ve been done correctly and all the necessary paperwork has been filed. A will prepared by a lawyer is more likely to hold up in court if issues arise, and it will make dealing with banks, insurance companies and other institutions easier for your executor.
5. There is an estate tax after you pass on.
The good news is that Canada has no estate tax – and no gift tax, for that matter. These are both American concepts. What Canada does have is income taxes arising upon death. Essentially, the Canada Revenue Agency (CRA) views it as though we’ve sold all our assets before we die, says Trzok. This act of "selling" (referred to as a deemed disposition) creates taxes addressed on the deceased person’s final tax return.
If you’re thinking it’s time to start an estate plan, Servus can help guide you. For help in getting you started, download the Servus Estate Planning Guide or make an appointment with one of our estate planning experts.