Estate Planning isn't Solely for the Elderly
Although older individuals often prioritize estate planning due to accumulated wealth and age-related considerations, there's no fixed age to commence this process. Tragically, premature deaths happen, and failing to acknowledge this reality can harm your family's future. In these early years of retirement, you have time to consider and update plans before a health crisis occurs.
Estate Planning isn't Exclusively for the Wealthy
The significance of estate planning transcends asset value. In fact, those with fewer assets may leave their families under significant financial strain without a plan in place. Estate planning involves not only asset distribution but also securing your family's financial stability through insurance planning. This proactive approach guarantees your family's financial well-being in your absence.
A Will is Just the Beginning
While a will forms a fundamental part of estate planning, and a review of past wills may very well be recommended. Your life and family circumstances may have changed over the years as children become adults, and grandchildren enter the family. You may wish to update your executor’s information and terms of your will to reflect these changing circumstances.
Beyond asset distribution, a robust estate plan incorporates power of attorney, health care directives, insurance policies, business succession plans, tax strategies, and trusts. A will delineates asset destinations but doesn't specify the process of asset transfer.
Consider Your Legacy
Under current tax rules a Canadian who donates to a charity received a 15% tax credit on the first $200 donated and a 29% tax credit on any additional donations. You are limited to donating 75% of your net income when you are alive. A donation to charity from an estate is not subject to that 75% limit. Donations made to charity upon death would provide a tax credit to the estate and benefit a cause you feel is important.
Purchase of life insurance is also considered at this stage in life as part of a gifting strategy. Death benefits in most cases would be higher than premiums paid and would be received tax free. This tax-free benefit could then be bequeathed to charities of your choice to earn a tax benefit for your estate. Your annual premiums paid could be viewed as an investment in your family legacy.
The Bottom Line
Commence your estate planning journey now. Preparedness for unforeseen circumstances is imperative, irrespective of age or asset value. Engage with your advisor to explore diverse investment and insurance strategies, ensuring seamless asset organization and transfer to your family's benefit. Your proactive approach to estate planning secures the future for your loved ones, offering peace of mind in uncertain times.