Most people don’t make a point of distinguishing between an estate plan and a will plan.
Estate plans should deal with conditions while you are alive. It enhances values to all concerned. Here’s how.
Everything you own now, will end up in one of just three piles.
Most people have no trouble that avoiding losses would be productive for their overall family goals.
Weak tax management. The most common problem is they fail to use the graduated rate table effectively. Deferrals work, like RRSPs, unless you defer income to avoid tax at 30% and pay it in your estate at 50%. The same idea with controllable capital gains. Like shares in a business. Even rental real estate. Lowest possible tax paid is often a mistake. Look at a longer time frame.
Failing to invest assets effectively. The conventional idea is an 80-year-old should own bonds and such. Have you ever wondered why that’s wrong. If you have investments that will certainly fall into your estate because you can live comfortably on the income or even less, why does the safe route make the most sense. Think of it as a stewardship idea. You own the assets for the benefit of others. In this case your heirs. Why not invest base don their investment structure. The switch will be troubling. You should have guidance that you can understand.
Failure to recognize that income and cash are not the same thing. Think about cash needs as what matters. Then think about how income can be used to generate the cash flow in up to the point where after tax amounts equal cash flow out. If after tax income is much higher than cash flow out you may want to consider alternate approaches. Overtaxed early reduces both the estate and the security while living.
Failure to anticipate near certain events. One of the couple will die first. There are options that should be ready to implement. Will the survivor know how to manage the family assets? Will medical problems cause problems. Institutional care for example. You may not be able to make another will. The law requires capability. Too little attention paid to the liquidity the estate will require.
Failure to pay attention to the wills. Wills are more complex than people think. Family monuments like cottages, farms, and businesses, are difficult because they are difficult to divide. Heirlooms are usually not of the highest value but some cause unnecessary conflict. Liquidity is always an issue. There are costs to be paid like taxes, fees, and specific bequests like charities. After those are paid and non-liquid assets have been transferred, is the distribution equitable.? You should arrange an accountant to create a pro forma probate. You may be surprised how it works. Only one criteria. You cannot participate. You won’t be there to clarify things when the real thing happens.
Missing opportunities. Some times a person should have more than one will. Not everything you own requires probate. Why pay the fees?
Things you can anticipate you can manage.
You live on cash flow not necessarily income.
There are more opportunities to minimize losses than you know.
Early transfers of a little money to heirs may help sooner than more money later will.
Think about how stewardship can benefit you.
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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.
Be in touch at 705-927-4770 or by email to email@example.com