Creating Your Estate Plan

Creating an estate plan does not necessarily require a substantial commitment of time or money. Most often, an estate plan can be constructed by following these six simple steps:

• Step 1: Prepare an inventory of assets and liabilities.
• Step 2: Define your estate planning objectives.
• Step 3: Evaluate your objectives.
• Step 4: Determine how to achieve your objectives.
• Step 5: Use the right advisors to implement your plan.
• Step 6: Periodically review your plan.

Step 1: Prepare an inventory of assets and liabilities

An inventory of your assets and liabilities is necessary for various elements of your estate plan, including tax minimization and Will planning.

Assets that you should list in your inventory include:

• Your home and vacation property
• Registered and non-registered investments
• Bank accounts
• The face value of annuities and insurance policies
• Personal property such as cars, jewelry, art, etc.
• Pension assets (i.e. membership in a company pension plan)
• The current value of any businesses you own

Liabilities that you should list in your inventory include:

• Mortgage on your home and vacation property
• Investment-related debt
• Credit cards
• Personal obligations such as family support

In your inventory you should also document where the following items are located:

• Original Will(s) and power of attorney/mandate
• Birth and marriage certificates
• Marriage contracts
• Insurance policies
• Real estate deeds
• Location of safety deposit boxes
• Details of pre-planned funeral arrangements
• Location of trust documents
• List of your professional advisors
• Names and addresses of executor(s)/trustee(s) and beneficiaries of your Will
• Names and addresses of guardians/tutors for children (if not set out in your Will)

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Step 2: Define your estate planning objectives.

When developing your estate plan, you should consider both personal and financial objectives that you wish to achieve with your plan. While objectives vary between individuals, below are some of the core questions you should answer:

• Who are your estate beneficiaries?
• What impact will the estate plan have on your family?
• How long do you intend to provide support for your immediate family?
• Are there significant family assets that will need to be addressed?
• Is minimizing income tax and probate taxes important to you?
• Do you want your beneficiaries to receive their inheritance immediately or at some future date?
• Do you wish to leave any portion of your estate to charities?

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Step 3: Evaluate your objectives.

Once you have clearly defined your estate objectives, the next step is to determine how your objectives can be achieved based on your current financial position. In conjunction with your objectives, you will need to consider other factors such as inflation, tax liabilities and U.S. Estate Tax.

See Taxes at Death for information on potential tax liabilities.

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Step 4: Determine how to achieve your objectives.

Your action plan will result from the issues identified in your estate evaluation conducted in Step 3. The fundamental component of your action plan will likely be creating a Will or, if you currently have a Will, at least a review of the document. A significant number of potential issues can be easily resolved through a well-constructed Will. For example, tax planning opportunities such as the use of testamentary trusts and special provisions for beneficiaries can be addressed.

Other potential elements of your action plan may include changes in the legal ownership of assets (i.e. the use of Joint Tenancy agreements), the purchase of additional insurance to address estate preservation objectives and possibly the gifting of assets prior to death. (It should be noted that Joint Tenancy agreements With Right Of Survivorship (JTWROS) do not apply for residents of Quebec.)

See Methods of Transferring Your Estate for additional information on Wills.

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Step 5: Use the right advisors to implement your plan.

This step is crucial to ensuring that your estate plan is properly implemented. You may require the assistance of several professionals, including an estates lawyer (or notary in the province of Quebec), an accountant, a financial planner, a trust officer and your investment advisor. As you seek out these advisors, make sure you select individuals with an expertise in estate planning.

Questions you should ask potential estate advisors include:

• What degrees or relevant designations do you hold?
• How long have you practiced in the estate planning area?
• Have you implemented estate plans of similar complexity to my own?
• What information can I provide to facilitate your implementation of the estate plan and reduce your work time?
• Is there a charge for an initial consultation? Do I have the option of an hourly fee or a flat rate for your services?

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Step 6: Periodically review your plan.

As a final step, you should always remain vigilant and cognizant that changes in your personal situation and in legislation may require changes to your overall estate plan. Periodic revisions are a must to ensure that your estate plan is still attaining your objectives.

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