The process of planning for your death and organizing your estate documents is a grim and difficult subject. As a result, estate planning often falls to the bottom of many people's priority list. However, it is essential to provide for the well-being of your family members and loved ones in the event of your death and you are typically the only person in a position to effectively survey and divide up your assets.
Individuals often wonder when the appropriate time is to start to meet with an estate planning professional in order to organize your estate. Typically, there are a number of triggering events which signal to an individual that it is time to organize his or her estate or will. Furthermore, a person should think about updating his or her will at least every five years.
If you have not yet made a will or updated it in many years, the following events should provide you with the necessary swift kick in the butt to meet with a professional and organize your estate plan:
- Getting Married
- Having Kids
- Starting a Business
- Buying a Home
- A Visit with Mortality
- It's Been too Long
Or getting divorced. Or remarried. These events reflect significant changes to your personal relationships and most likely the beneficiaries named in your will. It is important to include or remove your spouse to reflect who you want in your will. It is also important to remember that wills made before marriage are cancelled automatically upon marriage unless specified otherwise in the will.
Second marriages also present unique estate planning concerns. You must ensure that your new family is provided for and any children or spouses from previous relationships are dealt with accordingly in your estate planning documents by either removing them or altering their entitlements.
When you have your first child, it is important to have a will in place so they are properly provided for. While the laws on intestacy (dying without a will) will ensure that your children are entitled to a portion of your estate, the ultimate division may not be as you would have preferred.
More importantly, if you currently have children under the age of majority, your estate documents will name a guardian for your child if both parents die. If you have not selected a guardian, the legislation will dictate who will care for your child. In order to ensure that your desired guardian can easily take care of your child, you should design a will with a guardianship clause.
Once your child has hit the age of majority and becomes an adult, their needs will change and you should update your will accordingly. Your child or their spouse, or even your grandchildren, may affect how you distribute your estate. As well, as your children (and your spouse) age, you may wish to give them more responsibility, like naming them executor in your will.
As discussed in blog posts on our firm's website, owning shares in a private corporation allows Ontario residents to avoid estate administration taxes (probate) by making a secondary or corporate will. The assets owned by your private corporation can be shielded from estate administration taxes thereby giving more money to your beneficiaries. Dual wills are an important and useful estate planning tool, which should be taken advantage of. When you start your business, you should look to revise your estate documents.
In addition, family businesses may include several generations. As part of your business succession plan, you may be grooming your children to take over the business when you retire. Your will should reflect these business plans and can outline how your business will be passed on to your kin.
Buying a home is representative of a significant change in the value of your estate. Any change in your estate value, whether an increase or decrease, will affect who your beneficiaries are and how much you leave them after your death. Buying or selling a large asset means that you should update your will and how your assets will be distributed. As well, if your estate value increases greatly, there may be significant tax planning opportunities available.
Buying a home is also representative of moving. If you have moved out of the province or out of the country, you should be sure to update your estate planning documents. Each jurisdiction has its own laws regarding wills, trusts, taxes and other estate planning techniques. For example, the case law permitting dual wills is from the courts in Ontario and may not be applicable in British Columbia.
The harshest of reminders. If you or your loved ones have recently had a health scare or significant event reminding you about death, it may force you to realize that you haven't prepared for your ultimate demise. In the face of this realization, you will want to make sure that you have prepared properly for your death. In addition to many other important things, this includes creating or updating your estate planning documents.
Also, if someone you have named in your will has passed away or become incapacitated, you should update your estate planning documents to reflect these changes.
As mentioned above, it is recommended that your review or update your estate planning documents at least every five years. In addition to the reasons listed above, many things change over time including laws (for instance, refer to the results of the fiscal cliff debate in the United States), health (of both you and family members), relationships (such as a marriage or divorce within your family), your personal priorities (including charitable giving) and many other factors that will affect how you want to distribute your estate. It is important to make sure that your will and all estate planning documents are up to date and in accordance with your wishes.
Since estate planning tends not to be at the forefront of a person's mind, time can fly by before the essential documents are put into place. It is important to meet with an estate planning professional to draft a will and power of attorney for your family's security. Moreover, once your will is in place, it must be revisited every once in a while to ensure that it is still relevant. It is advisable to retain a professional to help organize your estate planning documents and keep them up to date.
As the old adage reminds us, "She who fails to plan, plans to fail." A budget helps keep your finances grounded in reality and keeps your spending under control.
Sure, in the heat of the moment, you may get some fleeting satisfaction from racking up huge balances on your ex's credit card. But, resist the urge. At the end of the day, YOU will be entirely responsible for footing the bill --and may very well be in violation of your divorce settlement agreement, as well.
No one wants to deny you a little post-divorce pampering. I'm just asking that you only treat yourself to what you can afford. A short vacation may well be within your budget. But, are you sure you can afford something more elaborate, such as plastic surgery? Think twice about investing in expensive procedures that are motivated solely by vengeance or insecurity.
Once your divorce is finalized, remember to remove your husband's name from assets (titles, deeds, credit card accounts, etc.) that you now own. If you haven't done so already, be sure to update wills, medical directives and all beneficiary designations on all your retirement accounts. If you don't, your ex-husband could be eligible for a portion of those funds!
Dating after divorce can be an important step towards creating a new future. However, many newly-divorced women jump in to relationships too fast, and then end up making poor financial decisions as a result. Do you really have enough money to pay for your new boyfriend's plane ticket/new suit/golf club membership? Do you want to loan money to someone you just met? (No, you don't!)
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