While no one likes to think about it, preparing for our last day is a key component of having a solid financial plan.
"A well thought out estate plan can help ensure your last wishes are carried out and minimize family strife," says Wade Stayzer, vice president, retail and investment services at Meridian, Ontario's largest credit union.
"It's about providing you with peace of mind and leaving your assets to your loved ones in the most tax-effective manner."
Stayzer suggests individuals consider the following components when establishing an estate plan:
1. Having a Will Prepared – A properly drafted Will is an important component of any estate plan. A Will outlines your wishes in terms of how your assets are managed and/or distributed after you have passed. More importantly, without a Will your loved ones will have to finalize your estate through the court system which could be a lengthy and expensive process. Given the importance of this document, you should work with qualified professionals when preparing it. It's important to ensure that your Will works in conjunction with the other components of your estate plan, such as your life insurance, business agreements and investments.
2. Appoint an Executor – When drafting your Will, an estate trustee needs to be selected. The role of an estate trustee, or executor, is to ensure the wishes you have outlined in your Will are carried out. This can be a very time consuming role, so when selecting this individual, make sure he or she understands the full list of responsibilities that come with this role.
3. Determine a Guardian – For parents who have minor children, a custodian will need to be appointed in the event of your death.
4. Establish Powers of Attorney – A power of Attorney for Property provides a person of your choosing the authority to manage your financial affairs in the event that you are no longer mentally or physically able to do so. A Power of Attorney for Personal Care, provides instruction for your ongoing healthcare, in the event that you become physically or mentally incapable of making decision for yourself.
5. Prearrange your Funeral – Prior arrangements with a licensed funeral establishment will ease your family's stress levels during such an emotional time. Financial experts advise that prepaying for your funeral can also be a wise investment if it is placed in an interest generating account that is fully guaranteed. The interest earned will offset the future cost of the funeral.
Stayzer recommends working with a financial advisor to discuss your estate planning options.
