The 5 Steps of Estate Planning

2009-01-06T08:42:00.001-08:00

Estate planning is the process of accumulating and disposing wealth before the death of an individual or estate owner, including married couples. It's aim is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes. In this article, we will discuss the 5 steps of estate planning.
Before implementing the 5 steps of estate planning, please make sure that you have already decided on what type of will that you want to have and ensure the validity of your will.

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A. Setting objective
Setting objective is defined as what you want your beneficiaries to have after your death. In estate planning most people would like to distribute their assets evenly to all beneficiaries because most assets that the estate owner would like the living spouse to have to be already signed into joint tenancy with the right of survivor. Since everybody is different, please make sure you set your objective clearly so your executor can ensure to distribute your asset according to your wish.

B. Collecting all financial data
The list of assets compiled for estate planning needs to specify the liquidity of the assets to ensure the estate will have sufficient resources to meet it's immediate obligations.

C. Strategies for transferring your assets
1. Transfer your assets to the estate while you are alive
By signing over your asset to the estate, such as sale properties at the arm's length, or converting your assets to a living trust.
2. Transfer of property at death
a) Assets that are not distributed according to the will include:
i) Life insurance
ii) All registered plans such as RRSP and company pension plan
iii) Joint tenancy with the right of survivor
iv) Tenancy in Common
After your death, your share of the properties is passed to your heirs.
b) Assets that are distributed according to the will
c) The last step in the strategies for transferring your assets to the estate is to make sure that all previous wills have been revoked

D. Implement your plan
a) Choosing an executor
Your appointed executor will carry out your instructions according to your will, settle outstanding debts, and distribute your assets. If you have children younger than 18, choosing a guardian to look after them.
b) Power of attorney
Power of attorney is a legal document where you appoint another person to manage your financial affairs under certain conditions, such as physical or mental incapacitation.
c) Living wills
Living wills are another form of power of attorney that grants a person the authority to make decisions about your personal care, in the event that you are unable to do so.

E. Monitor the plan
Monitor your plan annually. You want to make sure that everything in the will is what you want to leave to whomever upon your death.

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