Be Prepared

Callum Sutherland - 28 janvier 2022
Think about your assets in after-tax terms. For example, leaving a $500,000 home to one child and naming the other child the beneficiary of your $500,000 RRSP is not the same thing. Tax consequences are very different.

As a financial security advisor, I often get asked all sorts of questions. Two large parts of my job include investment and risk management. I think people shy away from asking about risk management because it’s uncomfortable thinking about our vulnerability and the end of our lives. The reality is that we’re all vulnerable to becoming ill, seriously injured, and death.

Please stop putting this off. It’s important to accept what you can’t control and get your affairs in order. If you were to suddenly die or become incapacitated, it would place a lot of stress on your loved ones to figure out what you would want. Not having a plan in place and having these discussions, can lead to disagreements that divide families (and possibly lead to large legal bills).

Here are some tips you can use to help make it easier for your loved ones in case something like this happens:

Tip 1: Have your will prepared by a professional.

Tip 2: Have your power of attorney (personal and health) documents prepared and discuss it with those that may have to make these decisions for you. Make sure your plan and wishes are 100% clear to your loved ones.

Tip 3: Take the time to understand the consequences your family may face from the loss of your income being from your family’s overall income.

Tip 4: Think about your assets in after-tax terms. For example, leaving a $500,000 home to one child and naming the other child the beneficiary of your $500,000 RRSP is not the same thing. Tax consequences are very different.

Tip 5: Don’t assume people will do what you want. For example, if you name someone the beneficiary of your life insurance policy for the purpose of paying your final tax bill, they don't have to do that once they receive the proceeds.

Tip 6: Take the time to figure out the final tax bill on your estate and leave enough money in the estate to pay that bill.

Those six actions are a good start. Spend some time asking the “what ifs” and then get in contact with the right person and get proper protections in place. Take care of your loved ones so that they can help take care of you and your estate in a way that matches your wishes.