The term "estate planning" means different things to different people, and this is just as it should be: a good estate plan reflects the uniqueness of the individual creating it. In its broadest sense, however, estate planning covers the process of accumulating, managing and distributing property over the course of a lifetime.

An organized approach to estate planning can bring order to what may otherwise be an overwhelming task. You can begin by focusing your planning on four elements:

• The people in your life.
• The property you own.
• Your plans for the future.
• The person who will assist you in achieving your goals.

After you have given due consideration to the people in your life, your property, your plans, and the planners you wish to involve, it is time to begin implementing your plan. Like a building project, you will start with a blueprint. Then, with the help of your advisors, you can begin to shape your plan. Your professional advisors can help you explore the advantages of one or more estate planning tools.

You and Your Estate - How Donations Make a Difference

Please remember that a legacy is an outstanding quality or contribution by which a person's life is remembered. Many times individuals will leave important legacies to those organizations which will carry on their work or interests.

There are numerous ways to make sizeable contributions to health care and education in Peterborough. No single method is right for every individual or family. In return for this measure of support, we have a major responsibility to help donors make gifts that are in their best long-term financial interest. Consideration must be given to an individual's circumstances, age at the time of the gift, tax bracket and future financial needs.

Trent University, St. Joseph's Foundation and their professional advisors are committed to educating the community about the importance of Estate Planning.

A gift to the St. Joseph's Foundation or to Trent University is an investment in the quality of life for yourself, your family, your friends and for generations to come. Please make a Legacy Gift so that we can do more, so that we can do better and so that we can continue to be worthy of your support.

Back to top

Banks

Things to consider when thinking about your estate plan and how your bank can help

• Where is your Will? Does your executor know where it is?
• Is it in your safety deposit box? Does your executor know where the key is?
• How many banks do you deal with? Now is the time to start to consolidate.
• What bills need to be paid right away? Your bank can help with this.
• Do your executors know about your affairs? Who knows how complicated your affairs may be when you are no longer here to point them in the right direction.
• Confirm the beneficiaries on any RSP's or RRIF's to be sure that they are still whom you want.
• Who is to manage your ongoing assets until the estate is settled?
• Do your executors know that they are your executors? Don't surprise them.

A visit to your bank now to talk about these and other issues, like joint accounts and probate fees, will save a lot of time and aggravation later.

Back to top

Protective Testamentary Trusts

Persons suffering certain disabilities may be statutorily entitled to government benefits. However, this entitlement could be jeopardized if their assets or income exceed a certain threshold. Great care must be taken in structuring and administering such a trust to maximize the other benefits to which he or she may be entitled, while at the same time ensuring that the beneficiary will be properly provided for. Because the entitlement to family benefits depends, in part, on the value of the disabled person's assets, the terms of a classic "Henson" trust are structured so as to provide the trustee with absolute discretion in the payment of either income or capital to or for the beneficiary. The completely discretionary nature of the trust ensures that the beneficiary is at no time entitled to compel the trustee to make payments to him or her. Since no interest in the trust assets vests in the beneficiary unless and until discretionary payments are made, the Henson decision confirms that such an entitlement does not affect the calculation of the beneficiary's assets. As a result of the amendments introduced by the Ontario Disability Support Program Act 1997, a testator or settlor may set aside $100,000 in trust capital during the lifetime of the beneficiary. All the income from which may be paid to the beneficiary for disability-related expenses without jeopardizing the entitlement to government benefits.

Advantages of a Trust company acting as a corporate Executor and Trustee:

• Full attention to your estate needs.
• Continuity of service during the full period of estate administration.
• Accessibility to the Trust Officer in charge and ready to assist your beneficiaries.
• Impartiality ensures fair and tactful treatment of each beneficiary.
• Even Hand Rule ensures proper protection of both the Trust Assets and the beneficiaries.
• Confidential nature of estate business.
• Skill and experience allows the highly trained professionals to administer estates efficiently and economically.
• Accounting procedures in place to prepare acceptable court statements.
• Knowledge and specialization dealing with Trusts, investments, tax matters, and insurance.
• Group judgment and the experience of senior officers.
• Financial responsibility of a well established Trust institution.

Back to top

Your family can be a vital component of your estate planning. Opportunities exist that can make a meaningful difference in their lives, while you are still able to appreciate the impact you have made.

The estate planning process is often viewed in the context of the period after death. This is not surprising considering that the very term "estate", focuses us on death. But instead, we could involve your beneficiaries while you are still alive.

Tossing money at your eventual beneficiaries can certainly endear you to them for a short time, but perhaps they are not very responsible with money. Do they really need that next big screen TV, or some other toy? Also, what if you need the money for yourself down the road?

The process being described does rely on some active involvement from all participants. If you and your family can not sit down to discuss your estate because of geographic or emotional reasons, then the process is not as effective. Ideally, if each member of the family met with the financial planner, the individual resources, objectives, problems and goals could be considered in the final estate planning process.

The focus is on trying to understand each person who will eventually be affected by the estate. The ultimate goal would be to try to look for ways that could minimize taxes while you are alive, benefit everyone, and then minimize taxes, probate and legal fees for your estate.

A simple example could be a grandparent who would like to help their grandchildren. By talking to all parties, a Registered Education Savings Plan might prove to be a good choice.

Another example might focus on adult children who really do not understand investing and saving. By involving them in the process, the opportunity exists to improve their knowledge, and make them more effective with their own resources.

Estate planning typically focuses on just your financial estate. By involving all the stakeholders, however, it can be an even more rewarding process, both financially and emotionally.

Back to top

Role of Life Insurance in Your Estate Plan

Estate planning takes the following into consideration:

• The assets and investments that you own.
• The people you want to receive your assets.
• The needs of your surviving family.
• The expenses of settling your estate.
• The impact of taxation on your estate.

A lack of proper financial planning could result in you having a lower monthly income to live on, paying more in income tax and passing on less to your heirs or charity. It doesn't have to be this way. By developing a financial plan that is unique to your situation, you can manage your wealth now, have enough money to retire on and provide for those who carry on when you are gone.

Life insurance is a common component of estate plans. Life insurance is a miracle of pen and ink that provides TAX FREE cash when it is needed the most.

Life insurance can be used to:

• Provide the cash to pay for the funeral and last expenses.
• Provide the capital to put in the trust to take care of loved ones.
• Provide cash as an inheritance.
• Provide a bequeath to your favorite charity.
• Provide the cash to pay the lax liability on the RRIF on the last death.
• Provide cash to pay tax liability on investments where applicable.

This can be done for mere pennies on the dollar, and allows you to maximize your monthly income while alive.

Back to top

It is not always possible to avoid ultimate taxes. You should therefore have a plan to predict the tax, and to generate enough cash to pay the tax.

Back to top

Your lawyer plays a vital part in the estate planning process. Three critical protections are obtained from your lawyer: your Will (through which your estate passes to your heirs and beneficiaries) as well as Powers of Attorney for both Property and Personal Care (to protect you against the consequences of a mental incapacity).

The Will planning process is an essential step in estate planning. Whatever assets and items of sentimental value you do not use or distribute during your lifetime are typically dealt with through your Will. There can be serious consequences for the families of someone who dies before making a Will. Without a Will, a Court application may be required to enable others to have legal authority to administer the estate of the deceased, pay the debts, and pass on the inheritances to the next of kin. This extracts a cost in both time and money. Without a Will, you have no choice about the executor of your estate -- this decision is left to a judge. You do not even decide who is to inherit from you -- this is determined by the government.

Your lawyer will help you in the Will planning process, ensuring you have the most suitable executor, the clearest administrative instructions, and the best protections for your heirs. Anything less leaves a sorry legacy for your loved ones.

Powers of Attorney for Property are also important. In Ontario, if you have a period of mental incapacity, it is not your spouse or children who have authority to keep your affairs in order. Instead, the provincial government -- in the form of the Public Guardian and Trustee -- has authority over your finances. Nobody wants this, either for their own sake, or for the sake of their family's struggle. The alternative is again an expensive and lengthy court application to replace the Public Guardian.

Powers of Attorney for Personal Care also provide valuable protection. Properly drawn, these identify and structure the people authorized to consent to medical decisions on your behalf if you are unable to make these decisions yourself. You can make legally binding medical decisions now that have legal effect in the future, even if at the critical time you cannot speak for yourself. The Personal Care Power of Attorney ensures these decisions will be both accurately communicated and properly carried out. Finally, the procedures that accompany these necessary documents can reduce delays in your obtaining medical treatment if you cannot speak for yourself.

In addition to providing expertise in arranging these legal protections, lawyers are also helpful in planning to reduce and avoid probate taxes, setting up trusts to control inheritances for vulnerable beneficiaries, and reducing income and capital gains tax consequences for you and for your estate. Your lawyer will also assist you in recognizing the need for input from other estate planning professionals, such as accountants and insurers.

Back to top

One of the first suggestions we can make for anyone undertaking their estate planning is to discuss your plans for your funeral with your children. You then need to sit down with your Funeral Director and sort out the exact details of your funeral Plan. Often, you will find that there are alternatives that you were not aware of. The most important element throughout all of the planning should be to keep in mind that this should be a Celebration of Life. With this in mind, you need to look at what can be done to make this a very personal arrangement.

There is no longer a certain standard or protocol to funerals that must be followed. Things such as the clothes to be worn, the music which will be played, and the order of the service can and should be arranged to reflect the individual's lifestyle.

You will need to decide on such things as your wishes for Burial or Cremation, the amount of visitation to be held, whether the service is to be in a Church or at the Funeral Home, if you want a Eulogy and, if so, who might give it, whether you want music sung during the service or simply played. These and many other matters need to be considered and dealt with during the pre-arrangement.

Once the arrangements are more or less complete, the Funeral Director will be able to quote the cost for these services, and then the decision can be reached as to the pre-payment of the Funeral. Naturally, things can be left simply as a pre-arrangement, but the alternative is to pre-pay the Funeral expenses. This can be accomplished by simply paying the quoted amount and having the money trusted. The other method, one which is fast becoming the more widely accepted method, is to use an insurance plan to cover the expenses. Whichever method you chose, you will receive a guaranteed Funeral Contract that will assure you that you will never have to pay more at the time of need. This is probably the most important reason that people choose to pre-pay. The other reason is that you also have an option, if you use Insurance, to pay over a period of up to ten years.

You may also want to finance the Funeral Arrangements of any dependents who are unable to do so for themselves.

Back to top

Higher Returns for Investors with a Financial Advisor

You have worked hard to save for your retirement with accumulated RRSPs, savings bonds and GICs. How can you benefit now by using the services of a financial advisor?

The Financial Advisor's vital role is backed by a study conducted by DALBAR Financial Services, a U.S. based research company, which analyzed the returns of investors in different equity mutual funds from January 1984 to June 1995. The study found that equity mutual fund investors who worked with a Financial Advisor tended to stay with their investments longer than non-advised investors. The result: investors guided by Financial Advisors earned about 20% more in cumulative returns.

In helping you select investments with objectives that match your needs, a personal Financial Advisor will seek to build a diversified portfolio to temper the effects of short-term market fluctuations on your long-term investments.

If you have limited yourself to a narrow range of investment products you may be missing out on the plethora of other 'tools in the toolbox'. Financial Advisors can offer a wide variety of tools, such as stocks, bonds, preferred shares, income trusts, and access to most mutual funds and segregated funds in the country. Access to these products and a thorough analysis of your circumstances allows the Financial Advisor to implement an investment strategy focussed on your unique goals and objectives and the best way to accomplish them.

A licensed Investment Advisor is governed by the "Know Your Client" rule. This policy ensures that any investment recommendations are offered only after an in-depth interview with the client has taken place in order to assess the investor's level of investment knowledge, risk boundaries and income requirements etc. Then a full written plan may be drawn up by the Investment Advisor, accompanied by an investment policy statement .

It is important for you to establish a relationship with someone you respect and with whom you feel comfortable. Furthermore, successful investing is a full-time job that requires discipline, education, and detailed knowledge of the market and experience in providing objective investment advice.

Back to top