estate planning

With the year-end fast approaching, the story about Johnny Depp (and other celebrities with Estate planning woes), act as a cautionary tale for the average Canadian.

Actor Johnny Depp, best-known for his roles in the Pirates of the Caribbean movies, made a reported $650 million USD and finds himself broke according to news reports last July. Since then, a couple of celebrities have died, including Aretha Franklin, with subsequent reports of no Wills in place with clear instructions on how to distribute their often large financial Estates.

Most Canadians want to pass their life savings on to their heirs. The assets remaining once retirement needs are met will be distributed more effectively if there is a properly prepared will detailing the deceased's wishes. Many people mistakenly believe that this issue is far in the future. Preparation of a valid will and its related estate planning considerations should be the cornerstone of a proper estate plan. Whenever there is a change in circumstances, the will should be reviewed and updated as needed.

The holidays are a time for family to gather together and share in the warmth of the season. If family members live at a distance, the holidays also provide one of the only opportunities of the year when adult children can sit down with their parents and siblings to discuss practical matters.

The news has been full of stories lately of surging real estate prices in the United States. Many Canadian visitors to such places as Florida, Arizona and Hawaii are seeing real estate promoters from these and other states running seminars about US real estate investing.

Many Canadians are viewing this as an opportunity to buy a US property before the prices get too high. But what are the consequences of owning U.S. property?

Your death will create problems. There will be three types - emotional, legal and financial. You can do certain things now, while you're alive, to reduce or increase these problems and make your heirs either love you or hate you.

Emotional Problems

You can increase the emotional upset after your death by leaving your affairs in a mess. Hide your will, or better still, don't make one. Have a number of secret bank accounts and investments.

It is seldom planned or wished for, but it is a reality and something that requires discussion - the illness and/or death of a spouse or partner. As the so-called Baby Boomer generation ages, there is a marked increase in widows suddenly left with financial situations that they do not fully understand. There are others who are forced to financially self-educate while providing quality of care for a partner that previously, and perhaps solely, took care of that role.

If you are between the ages of 35 and 65, it is quite likely that someone you know has recently been diagnosed with a terminal illness. Hopefully, there is time for them to review and organize their estate to ensure their loved ones are properly taken care of.

Joint ownership is used by millions for various reasons. When problems arise, they are usually unintentional and it can be too late to remedy them. For example:

Jane wants to avoid probate with as much of her estate as possible. She also wants her daughter, Sally, to have easy access to her cash at death to take care of last expenses. Jane thinks...she can do this by naming Sally on her bank accounts jointly.

On the surface, this looks like a quick and easy way to accomplish what she wants. It's what lies below the surface that can sink her financial ship.

We've all heard that life has two certainties - death and taxes. You need to know the two often coincide. While Canada does not have an official death, estate or inheritance tax, there are some postponed taxes that become payable on death. There are other obligations that need to be taken into account as well. Without proper planning, an estate may have to face large and unexpected cash shortages. Consider:

No matter how much we desire to protect the people most precious to us, the death of a family member is almost always met with some level of disbelief. In addition to the grief and mourning that follows the passing of a loved one, survivors are also left with the task of handling a variety of different matters at a time when they are probably least emotionally prepared to do so.

Here are some of the most critical matters that must be attended to when someone close to us passes away.