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The $$$ Maker
Report
Bi-Monthly Investment Newsletter by Karl
Jung, CLU
MAR/APR, 2012 |
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Gibsons Office: (604) 886-2691 |
Cellular: (604) 760-9899
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Fax: (604)
886-3014
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90 Monroe Road,
Gibsons, BC V0N 1V6 |
e-mail: kjung@dccnet.com
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Helping your
Executor help you
A recent survey showed that less than 60% of adult Canadians have a valid Will. Of the 40% without a Will, less than half felt their financial affairs were in order. If your wishes are spelled out in your Will and the required information is easily accessible by your executor, a faster and more thorough job of settling your estate is possible.
Without a Will, a family member (or court-appointed executor) is responsible to ensure debts are honoured, income tax is paid, and the remaining assets are distributed as per guidelines in the province the deceased resided in. A valid Will ensures your exact wishes are met following your death.
So what does the
executor do?
First, a decision has to be made regarding funeral arrangements. Should there be a cremation or a traditional burial? What about a religious ceremony? What was important to the deceased?
The next step is to locate a copy of the Will and determine if probate is necessary. Probate is the process to decide if the Will is valid. Depending on the size of the estate and where the assets are located, probate may not be needed. If probate is required, the Executor files with the provincial court registry in order to receive a “grant of probate” allowing them to proceed. If there is no valid Will, a family member must approach the court in order to be granted “letters of administration”. The estate is then settled as per applicable provincial or territorial guidelines and formulas.
What can you do
now to assist your executor?
Discuss your intentions with the individual(s) that you would think would be most suited for the position. Not everyone wants to take on the role of executor, and not everyone can do the job. It requires someone who has the time to do the work and someone who is comfortable with financial matters. A contingent or back-up executor should also be selected in the event your first choice is unable to take on the role; they may predecease you, become physically or mentally incapacitated and unable to perform the duties, or they might refuse the position at the time of your death.
Once you have selected the correct person and a back-up Executor, here’s what you can do now to allow them to perform their job details with efficiency:
1. Create a list of all your assets including investments, RRSPs, pension plans, life insurance policies (private and group plans), real estate holdings, safety deposit boxes, offshore or out-of-province investments and any business interests. Include account numbers, names and addresses of the financial institutions holding these assets, and the names of any contacts that could assist the executor.
2. Draft a second list with all your liabilities including credit cards, mortgages, lines of credit, unpaid income taxes, and any personal debts to friends and family if applicable.
3. Set up a large folder or binder that all of your legal & financial documents can fit into, and let the executor know where this can be found. Besides holding the Will, the binder should contain passports, real estate & mortgage documents, all insurance policies (including life, group, home and auto), the previous year’s tax return and the two lists you created showing assets and liabilities.
4. Include the names of your accountant, lawyer, insurance agent and financial advisor in your folder or binder, or advise your Executor because each professional can assist in their area of expertise. Your accountant and financial advisor should be involved as they can assist with opportunities to reduce income taxes and create the final tax returns in the year of death. Some of these financial dealings may include a deposit into a Spousal RRSP (if applicable) or tax-deductible donations to your favourite charities in order to reduce any potential capital gains tax.
5. Certain documents such as your provincial medical card, driver’s license and passport need to be cancelled. If they are not in the folder, ensure the Executor knows where to access them. Certain documents such as a divorce decree or prenuptial agreement that would affect the distribution of the estate should be included. Perhaps you are a partner in a business with a Buy – Sell Agreement that states what happens to your shares in the event of your death. Make sure documents such as these are easily accessible.
6. A short list showing all payments being made on a pre-authorized basis will assist your executor in notifying the proper financial institutions or authorities. Include any post-dated cheques or future electronic payments slated to come out of your bank account months down the road such as quarterly income tax installments, property taxes, condo fees or association/club fees.
7. If real estate holdings are involved, ensure that copies of land title deeds are in the folder so the executor doesn’t have to go to a land titles registry office to confirm ownership. This applies for rental properties, a family cottage or raw land, as well as your principle residence.
8. If information is stored on your business or home computer, make sure that a list of passwords or security codes is available. This is of great importance if you are self-employed or run a home-based business. Remember that after your death family members and business associate may need to access your computer files.
A generation ago it was deemed to be an honour to be one’s executor. The role is much more
complicated these days, and bringing in outside professional guidance is commonplace.
Make sure the person you select wants the position and is informed of what the
duties entail.
If you are in doubt of your executor’s ability to do
the job properly, make sure you let them know you would authorize the use of
outside professionals such as accountants, estate lawyers and financial
advisors.
Other
articles worth checking out this month:
If you die without a will, here’s what happens to your assets – a PDF file compiled by Canada Life
Maximum Income Security Benefits Effective January 1, 2012 – a PDF file summary compiled by Standard Life with a link to the Service Canada website for more information
Back to a list of The $$$ Maker Report and related articles