Main Methods of Estate Planning
If you are one of those people who have made great efforts in order to manage your money throughout your life, you will likely want to decide what happens to your assets when you die. You will need to get started on your estate planning.
Here are some simple ways to manage your estate and reduce costs:
1. Leave a will. As mentioned in a previous blogs on estate planning, having a will is one of the many ways to get started on your estate planning. If you die without one, your estate gets settled according to the laws of your province or territory and not according to your wishes.
2. Name beneficiaries. Ensure that you name a beneficiary when you buy life insurance or open a retirement savings plan. You can reduce estate costs if you name your spouse or common-law partner, a dependent child under age 18, a grandchild or a disabled adult child as your beneficiary.
3. Plan and Prepay your funeral. If you make known your wishes as to what will happen on your funeral when you die, there will be more peace of mind among your loved ones. You can describe the type of funeral you would like. You can also let your loved ones know if you would like to donate your body organs to help someone else. Planning your funeral should also include prepaying your funeral costs. When you prepay, that money will go into a trust account or insurance fund until your funeral. This will allow you to pay the costs on your own schedule rather than when your loved ones are dealing with your death.
4. Buy life insurance to cover expenses. The death benefit from your life insurance can be used to leave a tax-free lump sum payment to your beneficiary, provide a steady stream of income for your surviving loved ones and cover final estate costs including funeral and probate fees, outstanding debts and taxes owing.