The Importance of a Will

So who will inherit your estate when you die? Now, keep in mind that "estate" is not necessarily a mansion on 16 acres of property, but a legal term that's used to describe the sum total of what you own; from the car you drive to your comic book collection and everything in between. No matter how extravagant or how humble, everybody has an estate. It also includes your investments, savings and insurance policies.

Doing a little planning up front can help ensure that everything in your estate is inherited by the intended recipients and that your loved ones lose as little as possible to taxation. What you need to do, first and foremost, is to create a valid will. Die without one, and the government will step in and distribute your estate in accordance with provincial law. If you had been thinking it would be nice if so-and-so inherited this, and your lifelong friend got that, none of it will matter if you don't have a will.

The surest and safest way to create a will is to work with a lawyer or estate planner, since do-it-yourself will packages can leave details open to legal interpretation. You should update your will from time to time, as you gather new possessions, or as your family changes (new children, marriage, or divorce).

How to distribute your estate

It's a bit more complicated than simply dividing things up between your heirs. You'll need to be perfectly clear about the recipients of all of your assets, from pensions, to investments, stocks and bonds, real estate and personal property. You'll also need to note which assets you own jointly, as well as who are the beneficiaries for your RRSPs and insurance policies.

You'll also want to make sure you have enough liquid assets available to look after your liabilities, so that your heirs won't have to sell off physical or investment assets. Also, gifting assets before your death and establishing trusts are two good ways to help protect your assets from taxation. But keep in mind that both strategies can be complicated by your survivors' individual tax circumstances.


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