The Basics of Estate Planning in Toronto: An Introduction for Seniors
With a population nearing three million, Toronto is a diverse city with a dynamic economy. It’s also home to a growing number of seniors looking to secure their legacy. In fact, according to Statistics Canada, most of the city’s population growth is for seniors. This follows a trend that has been going on for two decades.
That growing demographic, which includes Baby Boomers and the Silent Generation, are responsible for transferring an estimated $84.4 trillion in personal wealth to their families through 2045. Of that, $72.6 trillion will go directly to heirs.
When it comes to planning for what you want in life and taking care of your loved ones, estate planning is key. While estate planning may be difficult to think about, it’s something we all need to consider. After all, settling your affairs today not only gives you, your family, and beneficiaries peace of mind, it allows you to enjoy your retirement, knowing your wishes will be carried out and the transfer of your estate will be simple and easy.
What Is Estate Planning?
First, lets discuss what an estate is. When it comes to estate planning, it covers everything from real estate, to land, valuables (antiques, art, collectibles), and personal possessions, which can include cars, jewellery, and clothing. An estate also includes financial assets: bank accounts, investments (stock, bonds), life insurance policies, and business funds.
Taken together, an estate is the net worth of your belongings minus any liabilities you may have: unpaid bills, loans, taxes, etc.
And it doesn’t matter how big the estate is, it’s imperative that you make plans for how the estate will be settled and those possessions and finances are eventually distributed.
So, what goes into an estate plan? In addition to distributing a person’s assets and paying their debts, it also includes healthcare decisions, key documents like a will, power of attorney, and who the executor will be.
Choose an Executor
An executor is someone who is tasked with “executing” the will. Because it’s such an important role, make sure you choose someone you trust to be the executor. If an executor is not appointed, the role will most likely be appointed by the courts to your immediate family.
That may not sound like a big issue, but not having an executor means the will go through probate and the assets will be dividend among relatives according to the laws in your province. Because of provincial laws, it could also mean you cannot give more to one relative than another, and certain people, charities, and groups could be left out.
Create a Will
A will is a legal document that lays out your final wishes. The executor is the person that carries out the wishes outlined in the will. Unfortunately, the majority of Canadians do not have a will; of those over 55, only 20% have a will. The biggest reasons for not having a will: they think its too expensive and they don’t think they need one. You do.
Assign Power of Attorney
A power of attorney (POA) gives someone (you can have more than one POA) the right, or power, to manage your financial affairs if you do not have the capacity to do so. Through the POA the person has the legal right to take care of important tasks, such as paying bills, opening mail, banking, filing tax returns, talking to lawyers and accountants, and even voting on your behalf.
Create a Living Will
If you’re a senior living in Toronto or anywhere else in Ontario, you can create a living will; it’s the common term for a “personal directive” or “advanced directive.” Through a living will, you designate a caregiver to make healthcare and end-of-life decisions while you’re alive, should you become ill and unable to make decisions about your healthcare.
The POA cannot make healthcare decisions; this is why you may want to choose another family member or friend to be responsible for the living will. They essentially step in as a healthcare POA and decide what kind of medications you can take or whether you should take them.
They’re also responsible for making critical decisions, including if you want to be on life support, and if so, for how long? They also ensure your wishes are granted if you asked for a do not resuscitate (DNR) order, to be an organ donor, or want palliative care at the end of life.
These are tough decisions that have to be made at a difficult time. A living will can save your loved ones from having to make heavy decisions about your healthcare and medical needs.
An Estate Planning Checklist for Seniors
Take inventory of assets
Name beneficiaries in investment accounts, pensions, and insurance policies
Create a will
Plan and prepay your funeral
Give out gifts while alive
Review this plan every three-to-five-years to make sure it still reflects your wishes
If there are complex assets and/or challenging family dynamics, think about choosing someone impartial to act as executor
Sharp Asset Management for Your Estate Planning Needs
Sharp Asset Management is an independent wealth management firm that is 100% owner operated. We are not affiliated with any financial institution, securities firm, or mutual fund company. As a result, our investment decisions are unbiased and we do not earn any commissions or fees on investments we choose on behalf of our clients.
All of our investment counsellors are chartered financial analysts, the highest level of achievement, and have over 10 years of experiencing managing portfolios. To learn more about investing with Sharp Asset Management, contact us today.