What You Need to Know about Financial and Estate Planning

What You Need to Know about Financial and Estate Planning

What You Need to Know about Financial and Estate Planning

The Top 5 Things You Need to Know about Financial and Estate Planning

Estate planning is all about preparing for the inevitable. That doesn’t just mean for those who are rich.

Your estate is made up of everything you own, this includes your car, home, bank accounts, investments, life insurance, and personal possessions (furniture, art, etc.).

And unfortunately, it doesn’t matter if you have a big estate or modest one, you can’t take it with you when you die.

Estate planning gives you control over the people or organizations that receive your possessions. An estate plan ensures your wishes are carried out the way you want, meaning who gets what and when.

Good financial and estate planning will also ensure that the smallest amount possible gets paid in taxes and legal fees.

There is more to financial and estate planning than that though. Good financial and estate planning also includes the following:


1.   Identify Your Goals

When it comes to financial and estate planning it’s important to identify your goals.

Understanding your goals will help you manage your assets and ensure your estate tax planning is up to date.

It’s also important to understand that your goals will change as your life does. As a result, your financial and estate planning should reflect these changes and your overall objectives.

2.   Will and Estate Planning

The most basic part of financial and estate planning is drafting a will.

Surprisingly, most Canadians do not have a legal will in place, in fact, less than half of Canadians (48%) do not have a will. For those aged 35 to 54, a whopping 55% do not have a will.

Because of changing family dynamics (divorces, children, etc.) the lack of a will can cause a big headache.

For starters, if you’re recently married or divorced, you may be surprised to learn that any will you had in place before these events is invalidated after changes to your marital status.

On top of that, most Canadians don’t realize that their spouse doesn’t automatically inherit their state.

The first step in financial and estate planning and protecting those you love is to make a will. And to review and change it, if necessary, from time to time.


3.   Power of Attorney

Having a power of attorney, or living will, is another important part of financial and estate planning.

A power of attorney gives someone the right to legally act on your behalf. Why would you want that?

If you become injured or debilitated because of illness or injury or are not able to make your own decisions, a power of attorney can make important financial decisions on your behalf.

A power of attorney can also act on your behalf if you leave the country and need someone to do your banking and manage your affairs.

If you don’t have a power of attorney, your family could be stuck having to go to court just to pay your bills.

Most people chose their spouse to be the power of attorney, but it’s also a good idea to have an alternate as well.

4.   Protect Your Income

A will and power of attorney can take care of your wishes, but neither will take care of loved ones should you become incapacitated or die. Should that happen, you’ll need insurance.

Again, life insurance will play a different role depending on where you are in life.

For a young family with a mortgage, life insurance might provide safety and security. For someone nearing retirement, life insurance is a good estate planning tool.

5.   Reduce Probate and Taxes

Reducing probate and taxes means more money in your loved ones’ pockets. Probate is the process of legally validating a will.

Every estate must go through a form of probate. Like most things, the cost varies by province. Some will charge a modest, flat fee for probate while others have a fee that is structured on the size of the estate.

Ontario has the highest probate fees: $250 for the first $50,000 of the estate and then $15 for each additional $1,000—there is no upper limit. If you live in Ontario and have a $1 million estate, probate taxes will be almost $15,000.

The trick is to structure the estate to minimize fees and taxes associated with probate. A tax professional can help you develop an effective plan.


FBC, Helping Canadians with Financial and Estate Planning

If you have questions about financial and estate planning, you’re not alone. Many Canadians are unprepared and unsure about what is involved when it comes to financial and estate planning. To help you gain a better understanding, contact the tax professionals at FBC.

Since 1952, the tax experts at FBC have worked exclusively with small business owners, farm operators, entrepreneurs, and independent contractors. We have helped tens of thousands of customers from coast-to-coast, with customized tax services, including financial and estate planning, business planning, bookkeeping, and tax preparation.

At FBC, we understand that no two people have the same accounting and tax preparation needs. That’s why we’re the only firm in Canada to offer integrated tax services on a year-round Membership basis.

For a fixed fee, Members get year-round access to our tax planning, tax preparation, consultation, bookkeeping, and financial planning services. FBC also provides all new Members with a review of their previous 3 years’ tax returns.

For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.

"I’m a great believer in luck, and I find the harder I work the more I have of it" — Thomas Jefferson