What About the Stuff?
Posted on Friday, September 25th, 2009
In my previous article—When You are the Surviving Partner—I wrote about what most of us don’t want to talk about – Death. Well, here is the question: “What happens when we die?” I am not talking about the spiritual realm; I am talking about the reality of who looks after the “stuff” when we are gone and what are the consequences. We first need to identify the stuff. Stuff for each of us can be different but the way it is treated after death is pretty much the same.
As we you progress through the various stages of your life, there are similar patterns that affect us all. During our twenties we are usually trying to establish a career and establishing a life relationship with someone. During our thirties we are well into learning what it means to have a mortgage and incur debt. It is the time we dedicate to raising our children and helping them prepare for their life’s journey. By the time we get into our forties, the kids are facing graduation, furthering their education and perhaps starting on a career path of their own. Fifty comes along and guess what, so do the grand children and it is also the time we start focusing on paying down our mortgages and thinking seriously about our retirement. From the sixties on and through our seventies we occupy our time living the life we thought we always wanted or at least we believe we have come to deserve. From about eighty on we are content to enjoy and reflect on all the things that we have held sacred during out lives and take pleasure in the little things that more of the heart.
All sounds quite lovely doesn’t it? So where does the “stuff” come in? The stuff is the unfinished business or the things along the journey that will remain after we are gone. Things like children’s education, the unpaid mortgage and other debts, retirement goals, passing wealth to the next generation and all those things we keep saying we will have to do some day. What if some day never comes and we just never acted when we could have? Is the will enough on its own to satisfy all your wishes? Not always.
Each province has a specific template that they offer as what they deem fair and equitable distribution of your assets should you die intestate. That means without a will. If your will follows a different design for distribution of your assets, for example, you might want to give one child more than the other, you leave your estate exposed to possible contestability under the wills variation act.
An executor or executrix is charged with the distribution of your assets according to your wishes outlined in your will. If you do not have a will the court will appoint an administrator. One of the first things that will have to be done is a filing of your terminal tax return. I spoke of this in my last article. The government likes to pretend you cashed in all your investments and sold all your assets the day before you died. This is called a deemed disposition. All taxes will be due and payable from the estate on your terminal filing. This is where the government may take a big bite out of your estate. Next there may be lawyers and accountants that have claims and, don’t forget the executor has a right to claim a percentage of the overall estate value too. Probate, executor and legal fees generally run 3% to 5% of the estate value. This can be small in comparison to what may happen if you have not planned well.
Anyone that has ever been an executor will tell you it can be a nightmarish experience. Many of the pains and heartaches associated with settling your estate can be avoided with proper estate planning. There can be significant tax reduction opportunities as well as smooth transfers of some of your holdings.
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It doesn’t cost anymore to work with a CSA but you’ll get a whole lot more of the understanding and respect you deserve. Feel free to contact Michael Furlot, Financial Planner, today for your free consultation.
