What is estate planning and is it something the average person needs?

The subject of estate planning often conjures images of complicated and expensive planning that is probably only for the wealthy.  Anyone who has ever bought life insurance, named a beneficiary on an RRSP or had a will done has done some part of the estate planning process.

Estate planning is an orderly process of reviewing all the components of your current financial situation and making sure that they are in line with your plans for your assets after death.

Estate planning has three simple objectives:
-minimize work for your executors
-maximize wealth for your heirs
-help you enjoy your wealth today
  
Although most people think of a will as the key to estate planning, it should actually be the last step once everything else is completed.

While there are some financial planners who specialize in estate planning, many steps can be taken without incurring professional fees:

Name beneficiaries on all RRSPs.  You can name your spouse and/or a dependent child or grandchild to defer taxes and avoid probate fees.

Have joint bank accounts but be careful about having joint ownership of investments unless both people have contributed. Otherwise the person who originally owned the money will still pay taxes on all investment earnings or interest.  Also, don’t name your children as joint owners on your home.  It will avoid probate but their share will be liable for capital gains tax at your death if they don’t share it as a principal residence.  In addition, your children’s creditors can make claims against the property as well.

Consider moving your investments to segregated funds.  These are like mutual funds with an insurance guarantee against loss of principal on death or after 10 years from investment.  Just as importantly, if you name beneficiaries, the money will bypass probate and may even be creditor protected.

It is legal to write your own will.  A holographic will is one done entirely in your own handwriting and does not need witnesses since your handwriting is individual, like fingerprints and can be forensically verified.

You can also use off the shelf will kits that give you a template where you fill in the blanks.  But beware!  If you simply write in your wishes and do not have the will properly witnessed then only the handwritten portions would be valid, effectively nullifying your will.

In either case, if properly done, either will is valid but can be ineffective because of what is left out or unclear.  It is also important that the original copy is available to the executor since only the original is valid.

Using an experienced estate lawyer can help you create a more effective will and allow you to use more complicated techniques to facilitate your wishes and save taxes or estate fees.
 
You could set up a testamentary trust in your will that would accomplish this.  The trust agreement could stipulate that the capital or the assets could be held under the direction of a trustee for an heir’s benefit, but without him having access or control.    

The trust could state that heirs may receive some or all of the capital under certain conditions or at a predetermined date or not at all with the capital going instead to other beneficiaries such as grandchildren.

Many people don’t realize that you can have more than one will.  If you have privately held business shares or other investments that don’t require probate to be transferred, you can write a second will dealing with these assets.  Not only does this save probate fees and taxes on those items but ensures privacy since a probated will becomes a public document and only the will for your personal assets would need probate.

Equally important is to involve a certified financial planner since there may be tax issues that could also defeat your intentions.  For example, you might feel that you are treating your heirs fairly by leaving a $150,000 house in your will to one and naming the other as beneficiary on a $150,000 RRIF. The entire RRIF would pass directly to the named beneficiary but the estate would owe income tax on it.  However, the house forms part of the estate. If there isn’t sufficient cash to pay the taxes and other liabilities, the house would be sold and only the residue distributed to the remaining heir.  

The more extensive and complicated your estate is, the more likely it is that errors and unnecessary taxes or expenses may make it impossible to fulfill your wishes.   This is particularly the case for farm families and requires special planning, such as dealing with dependant relatives with disabilities.

Regardless of how you do your estate planning, creating an estate directory is very important.  This is simply an inventory kept in a binder or file that lists and describes all of your property, including details such as location and account numbers as well as professional contacts.  The location of this list should be known to your lawyer and executor so that all of your assets can be accounted for if you’re gone.It should be updated periodically as assets change over time.  It can also be helpful in the event of your incapacitation for a power of attorney to deal with your affairs.

There are many other factors that may need to be considered but for most people working with an experienced advisor, the cost is small in time and cash but the payback lasts for life and beyond.

 Alan Atkins, CFP, CLU, CHFC, CSA , aatkins@netwealthconsulting.com 

A.   A cataract is a clouding of the lens. The lens is located at the front of the eye. It functions like the lens of a camera. It focuses light on to the retina, at the back of the eye. In turn, the retina transmits the in-coming light stimuli, via the optic nerve, to the optic centre at the back of the brain, where they are ‘translated’ into the images we recognize. Any disruption of this ‘light-focusing’ function of the lens will, therefore, cause visual impairment.

The lens contains a specific arrangement of proteins. As we grow older, the lens tends to ‘yellow’ a little. This is within the bounds of ‘normal aging’.  Subsequently, the protein material changes, forming an opaque area and blocking the passage of light. This is cataract formation, and can begin at the edges or in a central area of the lens.  Cataracts are quite common in seniors; they are definitely an ‘age-related’ disease.

TREATMENT is relatively straightforward and highly successful. The only effective approach is cataract surgery. The operation to remove the lens takes only a few minutes, if uncomplicated. It can be done under local anesthetic. To replace the natural lens, a plastic intra-ocular lens (IOL) is inserted. If both eyes are affected, surgery is generally scheduled about two weeks apart. Overall, results are outstanding, with a ‘success-rate’ in excess of 90%. Post-operatively, patients are often able to read newsprint without glasses. With the previous ‘fuzziness’ gone, you hear comments like “I now realize that things have EDGES!” Approximately 250,000 cataract surgeries per year are performed in Canada, according to CNIB.

This section of our newsletter gives you an opportunity to send in questions and receive answers from one of Canada's leading and founding gerontologists! Following his retirement as a professor of gerontology at Simon Fraser University, Dr. John Crawford continues to share his expertise and wisdom by serving as the VP of Education for the Canadian Academy of Senior Advisors.  Take advantage of your access to this remarkable resource by e-mailing your questions to: drjohn@canadacsa.com

Ingredients (Makes 4 servings)
 2 chicken breasts about 7 oz (200 g) each
 Marinade – About ½ the marinade does not make it into the final product
 4 tsp (20 mL) curry powder
 1 ½ cups (375 mL) fat free plain yogurt
 4 cloves of garlic chopped
 1 inch piece of fresh ginger root, peeled and grated
 Juice from 1 lime
 ½ tsp (2 mL) salt
 ¼ tsp (1 mL) cayenne pepper

Directions
1. Cut chicken into bite size chunks.
2. Make marinade in a medium sized bowl. Add chicken and place in the fridge for at least 1 hour or up to 12 hours.
3. When you are ready to cook the chicken, preheat the oven to 375º F (190º C).
4. Using a slotted spoon place the chicken in a glass baking dish. Cook for 20-25 minutes or until the chicken juices run clear.

Nutritional information per serving
(¾ cup /175 mL)
 Calories: 140
 Protein: 25 g
 Fat: 2 g
 Saturated fat: 0 g
 Dietary cholesterol: 59 mg
 Carbohydrate: 5 g
 Dietary fibre: 0 g
 Sodium: 231 mg
 Potassium: 415 mg

Developed by Nadine Day, RD. ©The Heart and Stroke Foundation.
Posted June 2008.

"We need to abandon the idea that wisdom is knowing everything-the whys, the wherefores, the how-tos.  Wisdom is often more subtle, both far simpler and exceedingly more complex.  For wisdom requires the discerning, the listening to, the acknowledgement of nudges and notions, of senses and sensations, of the minute and what we often mistakenly assume is the mundane.  Wisdom means listening to the still, small voice, the whisper that can be easily lost in the whirlwind of busyness, expectations, and conventions of the world."

Jean M. Blomquist

"To finish the moment, to find the journey's end in every step of the road, to live the greatest number of good hours, is wisdom."

Ralph Waldo Emerson

“Nine-tenths of wisdom is appreciation.  Go find somebody’s hand and squeeze it, while there’s time.”

Dale Dauten

Approximately 10,000 women and 19,000 men aged 65 or older were working in a paid temporary job in 2004.

(Stats Canada, A Portrait of Seniors in Canada, 2006)

-See your doctor for a complete check-up, particularly  if  you have a chronic medical condition.
-If you are taking large amounts of medication with you, then you will need to take a letter of explanation from your doctor.
-Organize travel insurance with pre-existing illness cover if needed.
-If you are concerned about your health, arrange to go on a package tour.

 (source : www.betterhealth.vic.gov.au)