The arrival of September means back to school for the kids. As parents, we want to ensure we do everything we can to keep our kids protected. This means teaching them to be safe while spending time away from home, and setting them up with everything they need to perform at their best.
But have you thought about how to protect their future? Leaving a legacy for your children can give you the confidence that they’ll be taken care of for years to come. It’s a heartfelt and essential part of estate planning for parents.
Careful planning isn’t just about passing on your assets, but also about ensuring that your wealth is protected for their future. A well-structured will and the implementation of tax strategies can be powerful tools in achieving this goal. With the kids safely back in school, now’s the time to ensure that you’re preserving the value of any inheritance you’ll leave for your children.
Start with a comprehensive will
The foundation of any effective estate plan is a well-drafted will. A comprehensive will allows you to specify how your assets should be distributed, who will be responsible for managing your estate, and how your children will benefit.
It’s important to appoint an executor who you trust to manage your estate, pay off existing debts, and distribute your assets to your beneficiaries. It can be helpful to choose someone with financial acumen, since the role involves handling financial matters.
Address who will care for minor children
There is nothing as unimaginable as leaving your children without their caring parents, but taking the time to consider who will care for them in your absence can be comforting. Specify who you want to be their legal guardian in the case that you or your spouse are no longer around to provide care. This decision can be critical to ensuring their long term well-being.
Consider setting up trusts for your children, especially if they are minors or lack financial maturity. Trusts allow you to control how and when your children receive their inheritance, and can give you some peace of mind that they’ll have financial support when they need it. It’s helpful to consult a financial expert who is skilled at estate planning and trust management.
Be specific in your intentions
It’s helpful to clearly outline how you want your assets to be distributed. This can help to avoid conflicts and ensure that your wishes are carried out as intended.
Consider all of your assets, including property, investments, and personal belongings. In addition to assets of value, you may wish to consider how you’d like sentimental items to be distributed.
Tax planning for your estate
In Canada, effective tax planning is essential for preserving the value of your estate. Our skilled team at MMT Chartered Professional Accountants has expertise in estate planning and inheritance tax management. Seeking guidance early in your estate planning journey can be beneficial in finding strategies to preserve your wealth for future generations.
We can help guide you with strategies for your consideration. For example, Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) are generally not subject to capital gains tax, so maximizing these contributions can be an effective way to preserve wealth for your children. You may also be able to maximize the wealth that stays in your family upon death by transferring property to your spouse or common-law partner.
Navigating Canada’s complex tax laws can be challenging. That’s why we recommend that you consult with a tax professional early, so you’ll be assured of getting the estate planning advice you need to ensure your future generations are taken care of.
Additionally, you may wish to consider other strategies, like life insurance policies that can provide a tax-free lump sum payment to your beneficiaries upon your passing. This can be helpful to cover estate taxes, debts, and other unexpected expenses without depleting the assets you intend to leave to your children.
It’s essential that you consider the legal aspects of estate planning, and communicate your wishes clearly to your children. If your children are mature enough, include them in discussions, especially if you’ve set up trusts or other specific conditions for their inheritance. Clear communication can help to avoid misunderstandings and disputes in the future.
Support for life’s big changes
Life is constantly changing, and your estate planning should reflect these changes. Whether it’s a major life event like a marriage, divorce, or birth of a child, significant changes in your financial situation should prompt a review of your will and estate planning. If you’re not proactive about making your wishes clear, it can result in an unintended consequence and failure to protect your wealth as you intended.
Estate planning is complex, and seeking the guidance of skilled professionals—including lawyers and financial experts—is prudent so that you can rest assured that your children and future generations will benefit from your hard-earned wealth.
Taking care of your children is about more than just their daily needs. It’s also about leaving a lasting legacy. If you haven’t yet done the careful planning required to protect your wealth and preserve the value of your inheritance for your loved ones, now is the time to get started.
MMT Chartered Professional Accountants provides a wide range of financial services, including tax and estate planning for every stage of your life. Let’s work together to ensure that your estate plan is a success to secure a brighter future for your children.