The most important part of any sound estate plan is a will. It’s not enough to just have a will however – it needs to be updated regularly, including executor appointments and beneficiary designations. Your executor is responsible for ensuring your assets are distributed according to your wishes as outlined under the terms of your will. Unless you’ve clearly outlined your wishes in your will, your executor will have limited power to determine the best way to do this, and this could result in your estate suffering significant and unnecessary investment losses, or paying too many taxes.

Power of attorney

In addition to your will, you should also discuss drafting a power of attorney with your lawyer. This is a legal document in which you authorize a person(s) to make decisions for you if you ever become incapable of making those decisions on your own. There are two kinds of powers of attorney – one for property and managing your financial affairs, and another for personal care.

Charitable giving

You may wish to set aside some of your assets for causes that are near and dear to your heart. There are many ways to make a charitable gift, depending on the level of control and involvement you want. It’s also a great way to reduce your taxes because gifts to registered charities generate charitable donation tax credits. The simplest way is through a direct gift of money to your chosen charity. If you make the donation before the end of the year, the value of the gift can be used to reduce your income tax payable for that calendar year.

Tax planning

Tax planning is an important part of estate planning. There are several ways to reduce tax liabilities upon death, such as charitable donations or naming spouses or dependent children as beneficiaries of any RRSP/RRIF accounts. It is a complex subject, so discuss it with your financial advisor, lawyer or accountant.

Insure your future

Life insurance

Life insurance can help provide your family with income after your death, cover your final expenses, pay off any outstanding debt, and protect the value of your estate, ensuring your wealth is passed along to your spouse, children and grandchildren. Unlike RRIF proceeds which are transferred to your estate and taxed, your life insurance policy proceeds are tax free. Your insurance premiums will vary by several factors including your health, age and coverage amount. Talk to a financial advisor for more information and guidance on determining the best type of insurance for you.

Long-term care insurance

Although you may be healthy now, it’s important to consider your health, and that of your spouse, down the road. In the event of illness, long-term care insurance can provide income and give you the flexibility to choose the type and amount of care you want to receive. It can enable you to stay at home, or enhance your level of care if you need to move to a long-term care facility.