Estate planning guide

Getting your estate in order

Your guide to the what, why, when and how of estate planning

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Contents What is estate planning? . . . . . . . . . . . . . . . . . . . . . . . 3

When should I plan my estate? . . . . . . . . . . . . . . . . 3

If you do nothing else, make a will . . . . . . . . . . . . . 3

How do I plan my estate? . . . . . . . . . . . . . . . . . . . . . . 4

1 Prioritize your goals . . . . . . . . . . . . . . . . . . . . . . . . 4

2 Take inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3 Build your plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4 Implement your plan . . . . . . . . . . . . . . . . . . . . . . 8

5 Share your plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

6 Monitor and adjust . . . . . . . . . . . . . . . . . . . . . . . 10

How do we get started? . . . . . . . . . . . . . . . . . . . . . . . 11

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What is estate planning? Estate planning is arranging your affairs so that when you die, your property is preserved and distributed the way you want.

Estate planning isn’t a document people read after you die. It’s a process that helps you today.

Done right, it helps you and your family be more confident about the future.

When should I plan my estate? Now might be a good time. Here’s why: • You already have an estate. If you have any savings, life insurance,

investments, real estate or other assets, you have an estate. Your estate includes all your possessions, both financial and non-financial.

• If you died tomorrow without an estate plan, your estate might not be preserved and distributed the way you want. And if you wait until the last minute, like before travel or surgery, you might be forced to make rushed decisions.

So, start now. It doesn’t have to be complicated. And you don’t have to do it alone. Your advisor, lawyer, notary, tax professional or accountant can all help you build your plan.

If you do nothing else, make a will Your will is your legally binding statement of how you want to distribute your property when you die. It’s only one part of your estate plan. But it’s the most important part.

If you die without a will, provincial legislation will step in and distribute your estate according to its rules. These rules may not match your wishes, and they can change at any time. That’s why it’s so important to put your wishes in writing, in your will.

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How do I plan my estate? Whether your financial situation is very simple or very complicated, you can use the same six steps to plan your estate.

Prioritize your goals Decide on the most important things you want to do with your estate. What do you want to do with it during your lifetime? And after you’re gone?

To help you decide, you may want to talk with your family and anyone who may receive part of your estate. Get their input and use it to validate your goals. You can use our brochure For my family (form 17- 8128). Ask your advisor for a copy.

Goals during your lifetime Your goals may include some of the following. Which ones are most important to you?

• Provide income for your retirement.

• Provide income for people who depend on you.

• Preserve your wealth from market losses.

• Continue to grow your assets.

• Make gifts to your family.

• Make gifts to charities and causes you believe in.

• Be financially prepared in case you become incapacitated or need long-term care.

• Help your company make a smooth transition to new management when you retire.

• Other goals…

Goals for when you’re gone Your goals may include some of the following. Which ones are most important to you?

• Pay for your funeral and other final expenses.

• Minimize taxes and (outside Quebec) estate fees. Provide money to pay them.

• Continue to preserve and grow your family’s wealth.

• Distribute your assets fairly and maintain harmony in your family.

• Provide financial security for your spouse.

• Provide money for children who need support.

• Make it possible for your family to continue living in their current home.

• Keep your family’s affairs private and protect your estate from legal challenges.

• Leave a legacy to charities and causes you believe in.

• Pass ownership of your company to your successors as efficiently as possible.

• Other goals…

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Your estate plan needs to cover your whole estate

Take inventory Take an inventory of all your possessions, both financial and non-financial:

• List all assets in one document. You can use our Personal records organizer (form 17-8125). It’s available in print and electronically. Ask your advisor for a copy.

• If your advisor or accountant has prepared a statement of your net worth, include it in your inventory.

• Don’t forget to include your online assets. For example, your email accounts, passwords, online banking, photo libraries, cloud storage and other digital assets.

If you haven’t collected this information before, it can take some doing to pull it all together. However, having it all written down in one place is well worth the effort, because:

• You can make sure your plan covers your whole estate.

• You can quickly put your finger on financial information when you need it.

• This documentation will be a huge help to your family and your executor after your death. In Quebec, an executor is called a liquidator.

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Build your plan With your priorities and inventory in hand, you’re ready to start creating your estate plan. If you work with professional experts, they can walk you through your options and help you make decisions. Document your decisions in a single document you can use as your master plan.

Your advisor can help with questions like:

• What strategies should you consider to grow your estate?

• What income will you receive when you retire?

• What income sources will you have if you’re disabled or experience a critical illness?

• How will your estate pay income taxes on your death? And, outside Quebec, how will it pay probate fees (estate administration tax)?

• What income sources will your family have after your death?

• Can changes in your insurance and investments help you achieve your goals for your estate?

• Would changes in the ownership of your property help you achieve your goals?

• For your business, what should you include in a succession plan and buy-sell agreement?

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Your lawyer, notary (in Quebec), tax professional and accountant can help with questions like: • What do you need to include in your will?

What should not be included?

• Should your spouse create or update their will at the same time?

• If you own property in several provinces or countries, do you need more than one will?

• What should you include in a power of attorney for property?

• What should you include in a power of attorney for health and personal care? In Quebec, you can give a “protection mandate” to cover health, personal care and property in case of incapacity.

• Could you benefit from a trust agreement?

• What will your estate and beneficiaries’ tax bill be on your death?

• What strategies should you consider to minimize your taxes?

Explore tax planning strategies

Here are some common tax planning tools to explore with your professional advisors. They all offer ways to transfer assets to your family outside of your estate, without paying probate fees:

• Life insurance

• Segregated funds

• Annuities

• Beneficiary designations

• Gifts made during your lifetime

• Joint ownership of property. In Quebec, your share of jointly owned property becomes part of your estate when you die, unless you bequeath it through a will.

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Implement your plan Now it’s time to take action on your estate plan. Again, be sure to work with professional experts to implement each step correctly.

Make a will or update your current will • See a lawyer (or notary in Quebec) to properly prepare your will.

• If you already have a will, your lawyer (or notary) can advise whether to update it or make a new will.

• Your spouse may want to create or update their will at the same time. This can help keep your plans in sync.

Update your financial arrangements to support your plan • Update your insurance and investments, to implement the strategies you identified

in step 3.

• Update ownership of your property, to minimize taxes and (outside Quebec) simplify transfer of ownership when you die.

• Create or update a trust agreement, if needed.

• Update your arrangements with your company, to support your succession plan.

Authorize someone to make financial decisions and someone to make decisions about health and personal care, if you become incapacitated • Discuss your wishes and the reasons for them with each person.

• Get their agreement to take on this responsibility.

• Sign a power of attorney for property and a power of attorney for health and personal care. In Quebec, you can give a “protection mandate” to cover health, personal care and property in case of incapacity.

• Consider selecting alternates, in case the first person isn’t available.

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Choose an executor to administer and distribute your estate

• Discuss your wishes, your decisions and the reasons for them.

• Explain your expectations of them as your executor. In Quebec, an executor is called a liquidator.

• Tell them where your important papers are, including the inventory of your estate.

• To help with this discussion, you can share a copy of our brochure For my executor (form 17-8130). Ask your advisor for a copy.

• Consider telling your executor about services that can simplify their role. For example, Estate at Ease™, offered through Canada Life™. This service can quickly and accurately prepare forms and documents involved in settling an estate. Ask your advisor for a copy of Simplify your role as executor (form 70-0280).

• Get their agreement to take on this responsibility.

• Consider selecting an alternate, in case the first person isn’t available.

• Document your choice of an executor in your will.

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Share your plan You may decide to share full copies of your will and estate plan with your family and professional advisors. Or you may decide to share only a high-level overview. Either way, you give people a clearer view of your plans.

Share your plan with your family and anyone who will receive part of your estate • Consider calling a family meeting to talk

about your plan.

• Discuss your funeral plans and whether you want to donate your organs.

• Consider sharing a copy of our brochure For my family (form 17-8128). Ask your advisor for a copy.

• Invite key family members to meet your professional advisors.

• Tell your family whom you’ve chosen as your executor and whom you’ve given powers of attorney for property, health and personal care. If your family doesn’t know them, arrange a meeting.

Share your plan with your key financial and medical contacts • Share the financial side of your plan

with your advisor, lawyer, tax professional and accountant. Introduce them to the person you’ve given your power of attorney for property.

• Share the medical side of your plan with your doctor. Introduce them to the person you’ve given your power of attorney for health and personal care.

• Share your will and your inventory of assets with your executor. Go through your will and answer any questions they have.

Monitor and adjust Once you’ve completed the previous steps, the biggest part of your estate planning is done. Congratulations! Now you can simply monitor your plan and adjust it as your situation and needs change.

• Once a year, go through our quick Yearly check-up for estate planning (form 17-8148). Ask your advisor for a copy.

• If anything’s changed, work with your advisor and other professionals to adjust your plan.

• Update your inventory of assets or personal records organizer, as necessary.

• If you make significant changes, let the affected people know.

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How do we get started? Let’s get started with what’s most important to you:

We can start with step 1 of the process by having an open discussion about your priorities for your estate.

Or we can start by walking through the six steps outlined in this brochure – and any questions you have about them.

Or we can discuss specific concerns you have about how your estate will be preserved or distributed.

Whichever way we start, the goal of this process is to help you and your family feel more confident about the future. So you can live more freely today.

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This material is for information purposes only. It should not be construed as providing legal or tax advice. Reasonable efforts have been made to ensure its accuracy. However, errors and omissions are possible. All comments related to taxation are general in nature. They are based on current Canadian tax legislation and interpretations for Canadian residents. They are subject to change. For individual circumstances, consult with your legal or tax professional. This information is provided by The Canada Life Assurance Company and is current as of August 2020.

Canada Life and design and Estate at Ease are trademarks of The Canada Life Assurance Company. Canada Life Estate at Ease services are provided by Peacehold Canada Inc.™ 46-7780-8/20