Simplifying your estate will help avoid the many perils associated with passing assets through your will
Note: everyone should have a legally valid will – this is not to suggest otherwise. However, there are important considerations to discuss when assets of significance pass through the will:
- Wills become public documents. For those who value privacy and confidentiality, especially when it comes to their finances, this is of material concern.
- Probate fees are 1.4% in BC, on values above $50,000. For example, an estate valued at $3m can expect probate fees of ~$41,000.
- The probate process can take months, if not years, especially for complex estates. The executor can be held personally liable if assets get distributed prematurely.
- Wills can be contested and estates can be sued. Of note in BC is the Wills Variation Act, which allows the court to vary a will if certain family members were not adequately provided for. This further exacerbates the lengthy process mentioned in point #3.
What can be done?
- Beneficiary designations should pass outside a will and are typically handled in a prompt, efficient manner. Regularly review the named beneficiaries on all registered accounts and life insurance policies, including primary and contingents.
- For non-registered investment accounts that are not jointly-held, segregated funds can be used. These are governed by insurance legislation and permit the naming of beneficiaries, as well as control over the timing that proceeds get distributed. This is of importance for those who feel a lump-sum inheritance might be detrimental to an heir.
- Trusts are a useful estate planning tool that can separate control from ownership. When properly structured, assets bypass the will. This can apply to investment portfolios, private shares, and real estate.
- Permanent life insurance is another useful asset to transfer wealth in a private, tax-efficient, timely manner.
For a review of your estate plan, reach out to Jeff Graham, CFP, CLU at (604) 363-7549 or jeff@firstoakfinancial.ca.
DISCLAIMER: this commentary is provided for general informational purposes only and does not constitute financial, insurance, investment, tax, legal or accounting advice. Always seek advice from your tax and/or legal advisors prior to implementing any planning strategies. Each circumstance is unique; financial, tax and estate planning is not a one-size-fits-all.