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:
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:
Liabilities that you should list in your inventory include:
In your inventory you should also document where the following items are located:
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:
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.
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.
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:
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.