By Kiran K.Sekhon
Estate planning will allow you to be remembered the way you want. It allows you to leave a legacy to the ones you love that reflect your wishes and gives purpose to what you’ve accomplished throughout your life. Without estate planning, that likely will not happen.
An estate plan provides comfort and security for your family. Unfortunately sometimes the opposite can result. If a disagreement arises over certain terms of the plan, the end result can be worse than having no plan at all. It’s quite common for estates to be challenged by unhappy family members. In the event of the plan being contested, it will cause delays which can run into years and the legal costs can deplete the estate, leaving little for the beneficiaries but bad feelings and broken relationships.
Your estate plan should reflect a mutual understanding of how you and your family view things. A good first step toward achieving that is to hold a family gathering and get everyone involved in the creation of the plan. Before the meeting, let your family know what you think the plan should be setup like and ask for their input.
5 Strategies for transferring assets
- Wills – The cornerstone of any estate plan and the most used method for assets to be transferred to heirs. The purpose of a Will is to describe how you want your assets to be distributed upon your death.
- Joint ownership – Registration of assets in joint ownership is one of the easiest ways to transfer assets. Joint Tenancy with Right of Survivorship, when one party dies, ownership is automatically transferred to the surviving partner. Although useful for avoiding probate taxes, other tax and legal complications can arise.
- Gifting assets before death – Undoubtedly the easiest way to transfer assets is to gift them away while you’re alive. Keep in mind that while gifting to charitable causes can lead to tax benefits, other gifting can create tax implications.
- Testamentary trusts – A testamentary trust takes effect upon death and forms part of the Will. It allows ownership of assets to be transferred while control of the assets is determined by the provisions set out by trust.
- Living trusts – A living trust is created while you are alive and there are many reasons why they are used. A living trust serves the same purpose of transferring ownership of assets while retaining control. Important for farm and business owners.