Protecting your estateProtecting your estate

Welcome!

Resistance to estate planningResistance to estate planning

• little personal benefit

• difficulty acknowledging mortality

• fail to recognize magnitude of tax liabilities

• underestimate how large their estates will become

• feel it’s too late or it’s too expensive

We’ll discuss...We’ll discuss...

• wills, power of attorney, executors

• tax issues

• survivor needs

• short-term planning

• long-term planning

WillsWills

A will provides:

1. security of knowing your possessions will be handled the way you wish after you die

2. guardianship of your children

3. the opportunity to appoint the person you want to manage your estate

4. arrangements for inheritance - who, what and how

Preparing a willPreparing a will

• a will tells people in charge of your assets how to distribute them

• if you die without a will, the courts step in

• keep your will in a safe place

Living willsLiving wills

What is a living will?

A living will states how you want to be treated if you become incapacitated by

illness, injury or old age.

Keep your will currentKeep your will current

• review your will as changes in life occur:

– births, death, marriage, divorce, etc.

• if the change is minor, use a codicil

• If the change is major, revoke the old will and draw up a new one

• marriage and divorce can revoke a will

General guideline ...General guideline ...

A will should be reviewed every three to five years.

ExecutorExecutor

What is an executor?

An executor is someone you select to carry out the instructions in your will.

Appointing an executorAppointing an executor

• being an executor is a big responsibility

• choose someone who is trustworthy, with a good business sense

• include in your will the provision allowing the executor to seek professional advice

Power of attorneyPower of attorney

There are 2 types of power of attorney:

Your power of attorney’s role is complete at death.

Property:

Makes financial

decisions on your behalf

Personal Care:

Takes care of your

healthcare needs

Real life storyReal life story

Taxes at deathTaxes at death

• executor must file a tax return(Jan. 1st of year of death to date of death)

• taxes to be aware of

• tax minimization using spousal RRSP

Immediate cash needsImmediate cash needs

• funeral expenses

• lawyer/executor fees

• probate fees

• mortgage or property rental

• credit cards

• debt payment

• special bequests

• buy/sell agreement

• emergency funds

Liquid resourcesLiquid resources

• cash assets

• chequing and savings

• money market funds

• GICs, Canada Savings Bonds

• life insurance

Funding long term needsFunding long term needs

• government assistance

• employee pension plan

• personal assets

• survivor’s income

Survivor needs summarySurvivor needs summary

immediate cash needs

+

future income needs

- funds available

= shortfall/surplus

Insurance solutionsInsurance solutions

Life insurance:

term

permanent

universal life

Health insurance:

long term care

critical illness

disability

Term insuranceTerm insurance

Features:

• coverage for a limited period of time (i.e. 1, 5, 10 , 20 years)

• premiums start low and increase with term and age at renewal

• no cash value

Often used to:

• protect your mortgage

• cover a personal or business loan

• protect a key person or buy/sell situation

Permanent insurancePermanent insurance

Provides:

• lifetime coverage

• level premiums

• cash value with option to pay up premiums

Often used for:

• long term needs

• final expenses

• estate conservation

Universal lifeUniversal life

• permanent life insurance policy with a cash value and life insurance components

• it’s flexible

– you can add cash when you have it or withdraw cash when you need it

• growth of the cash value is tax advantaged

Critical illness protectionCritical illness protection

• living benefit

• lump sum payment based on survival

• payable to you, not your dependents

• you determine how the payment will be used

Long term care protectionLong term care protection

You qualify to receive benefits when you are unable to perform 2 of the following daily routines:

1. bathing

2. toileting

3. transferring position

4. feeding

5. dressing

Disability protectionDisability protection

• you have some disability protection through CPP/QPP and possibly through a group plan

• continual medical care in your home will likely require more funding

Experts recommend you have disability coverage that equals 60% of your pre-

disability income.

SummarySummary

• having a will

• keeping your will current

• creating a power of attorney

• implication of taxes at death

• short-term and long-term financial needs

Today we've looked at the importance of:

Next stepsNext steps

• questions & answers

• putting your plan into action

• how I can help

• feedback forms

Thank you for coming!