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Friday, September 28, 2018

Estate Planning Essentials for Everyone

Do you want to know why people do not properly plan their estates? The answer is simple: It means that they are coming to terms with the fact that they will die one day. Now I am no doctor, nor am I a psychic, but I do know one thing is for sure, we all die eventually. Whether you are 18 or 80, estate planning is important. Young people are not exempt from this talk as often they are even more vulnerable than the elderly. Today I will give you my 10 Tips for Estate Planning. Young and old alike should pay attention as it just might save the ones you love time, money and a lot of headaches.


1) Wills

Everyone should have a will. I repeat, everyone should have a will. I do not care if you have 10 bucks to your name, or 10 Million, a will is important. A will gives direction to your family or loved ones what to do when you die. Why this important is because without a will people can make claims to your estate. In case you didn’t know, Prince died without a will. You might also not know that I am a distant cousin of his and it was my investment that got his career started. I even have the contract we wrote on a napkin back in 1978 before I was born. If you don’t have a will your loved ones will have absolutely no direction when it comes to your estate. It isn’t that expensive, so get it done or update yours if you already have one.


2) Powers of Attorney

A Power of Attorney is the person who will give direction on your behalf should you not able to give it yourself. This happens if you become seriously injured or ill. Imagine you go into a coma and your mom tells them to pull the plug because it is “what you would have wanted.” Instead of her imagining what you would have wanted, why not tell her what you want. When you get sick or hurt people will be left scrambling to do things they believe are in your best interest. Make sure you have a trusted power of attorney that will act on your wishes and don’t leave it up to guesswork.


3) Trustees

Remember when I said estate planning is for young people too? If you have minor children you must, must, must appoint a trustee. Your belongings, your plans, and your beliefs on how your children should be raised are very important. Without a trustee, your children may not be raised according to your wishes or even worse, by someone you don’t want. Your drunken brother might be the only one who steps up. Do you really want that? Also, if you have life insurance, and by the way you should, how that money is spent is according to your will and put forth by your trustee. By not doing this you could also be leaving that drunken brother a Million bucks in hopes that it gets to your kids one day. Scary stuff.

Leaving it All Behind – Billions Coming from the Boomers – Budget Boss


4) Beneficiaries

It is vital to name beneficiaries on all your insurance policies and your investment policies. Life Insurance bypasses the estate and goes directly into the hands who you want should you die. If you don’t have a beneficiary, it will go to your estate and be taxed. The same is true with some investment policies. Naming a beneficiary allows the money to go directly into their hands instead of flowing into the estate. Also, settling your estate usually takes many months and sometimes years. The money you want into the hands of your family members could end up in the hands of lawyers while they stall and delay while racking up a bill. I don’t know about you, but the government and lawyers can kick rocks when it comes to my money. Do yourself a favor and check if you have named beneficiaries on any insurance or investments you have.

Why You Need to Update Your Beneficiaries – Maple Money


5) Executors

Having an executor goes hand in hand with having a will. Your executor will handle the wrapping up of your estate, so this person should be trusted and competent. I also think it is important to understand that this person should know about it beforehand. This job could stressful and tiresome in some cases, especially if the estate is extensive or contested. In any event, I think this person should be compensated for their work if possible. In some cases, it will take them months or years to track down every dollar and get it to the right person. Love and care will be needed for this task.

Estate Planning


6) Life Insurance

I literally speak about it all the time, and there is a reason for it. Life insurance is one of the most powerful investments you can make. For $20 a month you can give someone a million bucks. By putting your registered investments into a life insurance policy, you can avoid losing half of them when you die. If done correctly, you can take your money and magnify it by 2 – 10 times its value when it gets passed on to the next generation. By the way, this is all guaranteed. The money gets to your beneficiaries within a few weeks or even a few days as opposed to months or years. Life insurance is truly a remarkable tool for intergenerational wealth. Some say the rich don’t buy life insurance. They couldn’t be more wrong. The wealthy buy the most and largest life insurance policies because they realize the power it has. It’s about avoiding taxes and efficiency of the distribution of money. Everyone has a need for life insurance, find out what yours is.

The 1 Financial Product Everyone Should Have – Budget Boss


7) Cover your debts

Items you own like your home pass into your estate when you die. If you have debts attached to these items or in general, the value of your estate is diminished. This means that your loved ones may not receive the full value of your estate. Covering these debts is important if it is a goal of yours to leave your estate intact. This can be accomplished in various ways, but the best is through cheap and effective life insurance. Take some time to go over your net worth and see what would happen if you died yesterday. Addressing it now means your loved ones won’t have to address it later.


8) Secure your documents

One thing that causes much grief among the executors of estates is when they must hunt through a safari of paper to find important documents. Keep all your important documents in a safe place such as a fire-proof safe or safety deposit box. Make sure someone else knows about it, ideally your executor, so that when you die they can easily execute your wishes. Every year update your net worth profile to allow the executor to easily confront wealth and debts. Finding the right information in a time of grief is challenging enough, make sure you don’t have them digging through receipts from the 1970’s.


9) Stay organized

To add to the above tip, keeping organized is crucial. This includes updating addresses, telephone numbers, beneficiaries, and most importantly your will on a regular basis. A simple hour a year can help you do this and if you need help ask a friend or family member. Ideally, you would have all your investments/insurance at one place and have one point of contact for your loved ones to speak to should something happen. This will make it easier on everyone. Having trusted people in the right spots is crucial to the proper execution of your estate plan.


10) Know what’s coming

You wouldn’t believe how much bad information there is out there regarding what happens when you die. The big one is concerning tax. You must understand that the source of your information is crucial. If it is your investment advisor, their goal is to retain your investments. They will tailor answers to your questions based on that bias. If it is a friend, know that they might not mean harm but that they also might not know what they are talking about. Take some time to truly understand what happens to your assets, debts, possessions and even children if you were to die. There is a wealth of information online to help you through this process. Speak with an estate planner today about what your wishes are. You have worked your whole life and deserve to know that what you want to be done, will be done.


Being in the insurance industry has opened my eyes to the conversation around death. It isn’t fun, but in all reality, it isn’t supposed to be. Estate planning is about love. You have the ones you love, and you want to make sure your wishes reflect that. Far too many times it is left up to chance and guesswork. Eliminate that with a proper plan.

“Planning is bringing the future into the present so that you can do something about it now.” – Alan Lakein
Financial Advisor

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Email – joe@budgetboss.ca 

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