Wealth And Estate Planning 101

If you don't have a will (or an updated will), get on it. 

Especially if you have children who are not yet adults: you want to make sure that if something happens to you and possibly your spouse (at the same time) that they do not become wards of the state and incite some seriously harsh custody squabbles.

And then of course there are the financial issues.

If you have non-registered assets, they will pass through the estate. A non-registered investment portfolio of $1,000,000 will cost $14,500 in probate fees plus legal and administration costs and as Bianca reminds me, all the headaches that come with probating a will (especially when it comes to financial institution compliance).

You can avoid probate by making your non-registered portfolio joint (with a an expected survivor or survivors) which means that it passes directly to the survivors and remains outside of the will. However, if there are multiple survivors, that may make it extra complicated as to how the survivors deal with the assets. Money does have some unfortunate consequences on human emotions.

If you have life insurance, of course, that will pass directly to your primary beneficiaries or contingent beneficiaries (who are secondary beneficiaries if something should happen coincidentally to the primary beneficiary). If you are still young enough (so that the costs are not too astronomical), this may be worth thinking about. Then you just spend your non-registered assets (less tax for you to pay in retirement, because they have already been taxed) before you leave the planet and your beneficiaries get tax free money when you do depart.

Then there is your registered money: RRSP's, RRIF's, LIF's, LIRA's and your TFSA's. Make sure that you assign a beneficiary and perhaps contingent beneficiaries. As TFSA's grow over time (as opposed to RRIF's, LIF's and LIRA's which you will have to draw down), there will likely be substantial amounts to be inherited (no tax consequences to the beneficiaries). To ensure a smooth, tax efficient transfer of a TFSA to a spouse, you want to make sure that you designate your spouse as a successor holder (you can only designate your spouse) which means that your TFSA can roll into their TFSA and continue to be sheltered.

Wealth planning is not only about building your wealth, but also how to best utilize it with the least possible tax consequences  for your ultimate use or for your beneficiaries.

Make sure that you use a registered Certified Financial Planning (CFP) professional to get you the highest standards of planning assistance.

Special thanks to High Rock's CFP professional, Bianca Tomenson, for input in this blog.