The Challenges of Estate Planning part 2

In the last issue of Nakamun Advisor, we looked at some basic estate planning tools that ensure your wishes are fulfilled after your death or incapacity. In this issue, we look at basic steps you can take to ensure your intentions and expectations are properly documented by your professional advisors and implemented by your representative(s).

Step 1 – Inventory your assets and liabilities

A comprehensive inventory of your assets can be as simple as a written description of the possessions you own personally or jointly with someone else, the location of each item, and the approximate financial value of each at the time of writing. The list should include chequing and savings accounts, guaranteed investment certificates, bonds, stocks/shares, registered and non-registered investments, pensions, homes, rental properties, timeshares, land or other property, partnership interests, accounts receivable, royalty or mineral rights, art, collectibles, vehicles, and other assets that have financial value. As well, list all insurance policies.

The list of liabilities should include any amounts you owe personally or jointly to any creditor, such as mortgages, lines of credit, credit cards, personal loans, IOUs, and promissory notes. If you have co-signed or guaranteed a loan for any person or business operation, be sure to include that, as well.

Step 2 – Decide what you want done with each asset and liability

After completing Step 1, consider what you would want done with each asset and liability if you died tomorrow. What needs to be sold? Who do you want to have what? What will your executor have to do to implement your wishes? What difficulties might your executor encounter?

How much and when would income or capital gains taxes need to be paid? What other costs might be encountered? Will there be sufficient cash available? If not, what can be sold? When and by whom?

If you are comfortable with the answers to these questions, much of the hard work has already been done. If not, you need to resolve the issues so you can answer the questions to your satisfaction.

Step 3 – Carefully select your executor(s) and/or trustees

People who are asked to serve as executor or trustee are often honoured and accept the role without fully realizing what is involved.

In simplistic terms the responsibilities of an executor are to:

• Identify, locate, and secure all assets of the deceased

• Identify, verify, and pay the debts and taxes of the deceased

• Verify specific entitlements of each named beneficiary

• Liquidate or distribute assets as instructed in the will of the deceased

• Attend to all legal, accounting, and financial administrative matters relating to the estate

Performing the duties of an executor can be daunting. Multiple duties, obligations, filing details, and other tasks can be difficult and time consuming. Administering an estate can take months or even years to complete, and executors can become personally accountable for legal liabilities of an estate.

When assessing candidates for your executor, consider age, health, energy level, and location, as well as their other time commitments, skill level, training, experience, acumen, and knowledge of your affairs. You may also want to identify an alternate executor or two in case your first choice is unable or unwilling to assume the responsibilities.

Consider, also, if you believe your executor should hire professional assistance in processing your estate. If so, identify the lawyer, accountant, and/or financial planner who will be able to provide the most effective assistance.

Step 4 – Take action

Once you’ve worked through the previous steps, you’ll have a good understanding of the issues to raise with your advisory team. This team should include a lawyer with wills and estate expertise in your home province, an accountant with experience in estate tax planning and terminal income tax returns, and your Nakamun Advisor. With your guidance, this team will create and document a viable plan that fulfills your wishes.

Each member of your advisory team will have a complimentary perspective on how best to reach your planning goals. Ensuring each member is fully engaged in the process, before the documents are created can avoid costly revisions and minimize unexpected outcomes after it’s too late.

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Nakamun Financial has now merged with ONYX Financial Group.  To contact us directly, we can be reached by phone or email as follows:

Blair Smith
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Bob Challis
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