Ep # 98 - Estate Planning 101: What to Include in Your Will
We examine the essential aspects of estate planning, focusing on creating a comprehensive will. We look at choosing the right executor, whether a family member or a professional service, highlighting three key scenarios.
We also discuss the importance of including digital assets in your will and the benefits of secondary wills for business owners to avoid probate fees on business shares. Finally, we remind listeners to regularly review and update their estate plans to remain current and effective.
What You’ll Learn in Today’s Episode
Choosing the Right Executor: Select an appropriate executor for your will, whether a family member or a professional service. The role of the executor is significant and can be overwhelming, so choosing someone capable and potentially considering a professional can ensure the estate is handled properly.
Scenario Planning: Effective estate planning involves considering three primary scenarios: with a spouse, with descendants only, and with no descendants. Each scenario requires different considerations for asset distribution and tax implications.
Per Stirpes Distribution: Including per stirpes distribution in your will ensures that if a beneficiary predeceases you, their share of the inheritance passes down to their descendants, maintaining the intended family line of inheritance.
Trusts and Restrictions: Establishing trusts can be essential for managing inheritance for minors, disabled beneficiaries, or individuals who may not handle their inheritance responsibly. Trusts provide control over how and when beneficiaries receive their inheritance.
Digital Assets and Estate Registry: Modern wills should include provisions for digital assets and online accounts. Maintaining an updated estate registry with all necessary information for executors is critical, as is conducting family meetings to communicate your estate plans and avoid potential disputes. Regularly reviewing and updating your estate plan is also important to ensure its effectiveness.
Ideas Worth Sharing
· "Being an executor can be a big job, and it's not everybody who is cut out to do it."
· "The trust is really allowing you to have some control from the grave."
· "It's great to have those key documents in place, but you need an estate registry."
Resources in this episode
Ep # 29 – Executor Help with David Edey
Ep # 31: Courageous Conversations with Jane Blaufus
Ep # 88 – Testamentary Spousal Trusts
Estate Planning 101: What to Include in Your Will
Doing your estate planning is not a one-time deal. You need to revisit it regularly, at least every three years. If there are big changes and any life changes, we want to revisit them immediately.
We explore essential estate planning strategies, gaining insights into topics such as choosing the right executor for your will, setting up trusts for minors and disabled beneficiaries, and the benefits of an estate registry for executors. Our mission is to help individuals make informed decisions about estate planning, particularly regarding digital assets, choosing the right executor, and setting up trusts for beneficiaries.
In this episode, you will be able to:
Discover how to safeguard your digital assets through strategic will planning.
Learn to select the perfect executor to ensure your wishes are carried out carefully.
Unlock the secrets to creating a secondary that will explicitly be tailored for business owners.
Explore the benefits of setting up trusts to protect the financial future of minors and disabled loved ones.
Uncover the advantages of an estate registry for executors, simplifying the administration process.
Planning for Different Scenarios
Estate planning involves considering various scenarios that may arise after your passing to ensure that your assets are distributed according to your wishes. Scenario planning is essential, especially in cases involving different family structures. Whether you have a living spouse, only descendants, or no descendants, assessing the tax implications and allocating assets in each scenario is crucial. We look at how to navigate these scenarios effectively, emphasizing the need for detailed planning to prevent conflicts and ensure a smooth transition of assets.
Understanding Executors
When it comes to estate planning, selecting the right executor for your will is crucial. Executors play a significant role in ensuring that your final wishes are carried out efficiently. Understanding the responsibilities and complexities associated with being an executor is essential. Whether choosing a single executor or multiple individuals, careful consideration should be given to their abilities, trustworthiness, and willingness to undertake the responsibilities. It's imperative to weigh the pros and cons of joint and several designations for multiple executors to ensure the smooth execution of your estate plan.
The resources mentioned in this episode are:
Email info@retirementplanningsimplified.ca to request a copy of the estate registry mentioned in the podcast. This registry can be used to organize and document important estate information.
Revisit your estate planning every three years or immediately after any life changes to ensure it remains up-to-date and relevant.
Consider having a family meeting to communicate your estate planning decisions and considerations to your beneficiaries, ensuring clarity and understanding.
Ensure that your powers of attorney for health and property are in place, as they are essential components of comprehensive estate planning.
Timestamped summary of this episode:
00:01:23 - Understanding Executors
Lindsay discusses the importance of choosing an executor and the considerations for selecting one or multiple executors. She also highlights the option of enrolling professional executor services.
00:04:19 - Planning for Different Scenarios
Lindsay explains the three scenarios to consider in estate planning: assets distribution if the spouse is alive, if there are descendants only, and if there are no descendants. She emphasizes the need to plan for all scenarios.
00:06:39 - The Importance of Per Stirpes
The concept of per stirpes is explained, emphasizing the importance of considering this in the will to ensure assets are distributed down the same bloodline, especially in the event of a beneficiary's passing.
00:08:38 - Significance of Trusts and Restrictions
Lindsay discusses the need for setting up trusts in the will, particularly for minors, disabled children, or when there are concerns about the beneficiary's ability to handle the inheritance. She also explains the concept of restrictions on gifts or trusts.
00:11:58 - Distribution of Assets
The three key aspects of asset distribution - paying debts, taxes, and final expenses, specified gifts, and the residue - are highlighted, providing an overview of the order in which these should be addressed in the will.
00:13:13 - Planning for Digital Assets
Joe and Lindsay discuss the importance of planning for digital assets in a will, giving the executor authority to access and manage email, social media, and online accounts. They also emphasize the need for an estate registry to keep track of all digital assets.
00:14:24 - Secondary Wills for Business Owners
The conversation shifts to the topic of secondary wills for business owners. Joe explains that shares in a privately owned company do not have to go through the estate, and a secondary will can address how to deal with them, helping business owners avoid unnecessary probate fees.
00:15:52 - Importance of Estate Registry
Joe stresses the importance of an estate registry, a document that contains all the information an executor needs to know, including accounts, advisors, and digital passwords. He highlights the significance of communicating the location of the estate registry to executors and beneficiaries.
00:17:34 - Revisiting Estate Planning
Joe emphasizes that estate planning is not a one-time deal and should be revisited every three years or immediately after any life changes. He underscores the need for ongoing review and updates to ensure the plan remains relevant and effective.
00:19:46 - Final Thoughts and Actions
Joe concludes by emphasizing the importance of thorough planning, recording everything in the estate registry, and effective communication with family members. He encourages listeners to take active steps to ensure their estate plan is comprehensive and well-communicated.
Frequently Asked Questions
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Estate planning should be revisited regularly to ensure it remains relevant and accurate. Life changes such as marriage, divorce, the birth of a child, significant changes in assets, or the death of a beneficiary can impact your estate plan. Additionally, as you explore different types of trusts in estate planning, you may find that your needs and goals evolve. Reviewing your estate plan every three years or after any major life event helps ensure your wishes are up-to-date and legally sound.
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Your executor should ideally be someone you trust implicitly, as they will be responsible for managing your estate after you pass away. This person should be organized, detail-oriented, and financially savvy, as they will need to handle tasks such as paying off debts, filing taxes, and distributing assets according to your will. It's crucial to choose someone who understands your wishes and can execute them faithfully. Additionally, consider appointing a financial advisor as your executor if they meet these criteria, as their expertise can be invaluable in managing financial aspects of your estate. It's also wise to name an alternate executor in case your first choice is unable to fulfill their duties.
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Testamentary spousal trusts are established through a will to benefit surviving spouses. They provide financial security by allowing the surviving spouse access to income from the trust while preserving the assets for future generations, protecting against remarriage or incapacity.
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Communicating your estate planning decisions to your beneficiaries ensures clarity and understanding, reducing the potential for disputes. Consider having a family meeting to discuss your plans and provide copies of important documents to your executor and trusted family members.