By Life Stage
Each stage of adult life, like each season, has its own beauty and opportunities, and at every stage there is a need for estate planning. No adult is too young to create a plan nor too old to review a plan.
During the periods when we complete formal education, launch a career, marry, have children, purchase a home, and probably assume maximum financial responsibility, as well as become involved in the community and serve on boards, our net worth remains modest, and we are not yet considering the end. Because of this, we tend to postpone estate planning during these years. That is a mistake, as we must still provide for care of dependents, dispose of property we own, and arrange for management of our affairs in the event of a disability from accident or illness. At least, we should have a simple will, power of attorney, a medical directive, and adequate insurance with proper beneficiary designations. Common Planned Gifts at this stage would be gifts of insurance, or beneficiary designations on an RRSP.
At this point, educational expenses for children may have come to an end, but elderly parents may require a financial subsidy. These tend to be peak earning years when we significantly increase our estate value. It is also when we achieve recognition in our profession and assume leadership roles in community organizations.
The simple will that may have sufficed before is no longer adequate, for there may be adult children in different circumstances, grandchildren, and perhaps a divorce and remarriage. It is now necessary to have a more complex estate plan that may include one or more trusts as well as a will and the basic documents mentioned above. Also, steps to minimize taxes at the end of life will likely be part of that plan. Common Planned Gifts at this stage would be gifts of insurance, beneficiary designations on an RRSP, cash, or Securities.
Retirement is our greatest period of net worth, including real estate, investments, and valuable personal property. We may convert our RRSP to an RRIF and begin withdrawals. This stage is when we develop a comprehensive estate plan including a succession plan if we own a business. The can contain trust arrangements for certain beneficiaries, tax strategies, and contingency provisions. You may also review beneficiary arrangements to coordinate them with provisions in the will. Earlier editions may have included provisions for charities, but particularly at this stage, we want to think of organizations that embody our values and through which we can make a positive difference. There are many tax-advantaged ways of arranging these charitable legacies, and our office would be pleased to discuss them with you. Common Planned Gifts at this stage would be beneficiary designations on an RRIF, bequests of cash or securities, gifts of insurance, real estate, or personal property.
Usually, when one has been retired for a while, accumulation will have ended, and investment/retirement assets will gradually deplete. Some will sell their homes and enter long-term care. This part of life can be very enriching, full of wisdom and memory, and a view of the legacy you have worked for. Normally, a comprehensive estate plan will have been developed by this stage of life, but the will and other estate planning documents should be periodically reviewed and updated. There may be changes to the list of beneficiaries, to tax laws, family circumstances, and institutions. Common Planned Gifts at this stage would be bequests of cash or securities, real estate, or personal property.