Estate planning requires a plan

Post by YiLin Zhu
By Paul Brent on Feb 04 2009

If you need the perfect conversation stopper to escape the kitchen corner you find yourself in at that next party, you might try raising the topic of estate planning. It's one of those terms, like "root canal," that sound worse than the inevitable reality.

Estate planning sounds stuffy, boring and tedious. One financial writer said it could easily be sexed up by calling it "intergenerational wealth transfer" or something to that effect. With about $1 trillion sloshing around the economy and waiting to move from Canada's eldest generation, you would think the marketing wizards in the financial industry would have addressed this by now.

In truth, estate planning is in need of a makeover because it's a concern for anyone who has assets, not just the well heeled. What makes estate planning so daunting, however, is the quick realization that you likely need a team of people involved in managing your estate: financial advisers, accountants, lawyers and executors.

Perhaps not surprisingly, the country's big financial institutions have stepped in and are offering the closest thing to one-stop shopping. "You can go to any one of the banks," said Elaine Blades, manager of trust products and services at Scotiatrust in Toronto. The trust arm of the Bank of Nova Scotia runs a private client group as a unit of its wealth management services "where we can offer will and estate planning. We have financial planners and different types of investment expertise."

For those who don't want to put their estate planning needs all under one roof, Blades said people should consider a fee-for-service financial planner who doesn't recommend particular services, but rather attempts to draw up an objective plan and then works with an accountant, lawyer and other professionals, such as insurance experts, as needed to implement your estate plan.

Identifying and creating a team of professionals to shape and steer things is the first step in estate planning. The process also includes creating a balance sheet, or estate fiscal map, that shows where your assets and liabilities are hiding; assessing life insurance needs for you and your spouse; appointing a power of attorney; drawing up a will; and having a tax specialist ensure the estate's assets are going to be disbursed in the most tax-efficient way possible.
It looks like a daunting list and that is why firms such as Royal Bank of Canada state "people put off making an estate plan because they think it's going to be too difficult and time-consuming." The firm advises that people first tally up their assets and liabilities to get a rough estimate of their net worth, gather key papers and documents along the way, and then think about the goals and objectives of their estate plan.

Think of that as the fun part of the exercise. This should include deciding upon beneficiaries, how your assets will be divided. and what will happen to big assets such as a vacation home or family business.

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