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What Is Estate Planning and Why Does It Matter?

Estate planning is a simple term for a very broad topic.

A lawyer will refer to estate planning as a “means to decide and secure who will inherit your assets” after you die. While that’s true, estate planning as an element of financial planning involves much more than that.

Throughout most of our lives, we focus on growing our net worth. We contribute to pensions and retirement accounts, save into TFSAs, and buy disability and life insurance so the needs of our family will be taken care of.

But although you’ve accumulated some or all the assets you need, you may not realize that you have a new objective: protecting your lifetime’s accumulation. 

Protecting it from what?

  1. Unwanted inheritors
  2. Paying more income tax on death than necessary
  3. Exposing more of the estate to probate than necessary
  4. Family disputes

Plus, estate planning can:

  1. Protect underage or vulnerable inheritors
  2. Ensure the continued ownership of beloved family property
  3. Provide for your family
  4. Provide gifts to charity

Estate planning makes life easier for those who must go on without you. Losing a beloved family member is hard enough for those you leave behind but doing so without an estate plan can be very hard on them.

Ensuring the right assets go to the right people at the right time

The biggest element of estate planning is ensuring assets land in the right place

If you die without a will, your province will decide how your assets are divided. In BC, it’s common for the surviving spouse to receive $300,000 (or $150,000 in a blended family) plus half of the remainder of the estate. The rest of the estate would likely be divided amongst the children.

That’s a very rigid and one-size-fits-all approach, and I bet that you as the reader wouldn’t be happy with that. What if there are certain assets with more emotional value than others? What if the family home is worth more than the inheritor’s share as decided by the courts, and your spouse wants to keep the home? What if certain people require more financial care than others? What if there are pre-existing disputes in a blended family?

That list of questions could go on. Our lives are all so individual and unique, and having a court decide where your assets should go is a poor choice.

Plus, if you’ve got young kids, you probably don’t want them receiving their inheritance until age 19 or maybe age 30 – sometimes, even older. 

Perhaps you have a dependent spouse, and you want to provide for them until their passing, but ultimately making sure your kids inherit. 

Maybe you’re estranged from one of your kids, or you want everything you own to go to your favourite charity.

All these concerns and many more can be answered with an estate plan.

Erosion of your lifetime’s accumulation by income tax

If you are (or were) employed – remember all those tax refunds you received over the years after contributing to your RRSP? And for the self-employed, remember how contributing to your RRSP reduced the amount of tax you had to pay? And for the incorporated business owners, I’m sure you recall retaining all those earnings inside your corp.

Well, all those strategies are tax-deferral strategies, not tax-avoidance strategies. At some point, the tax will become due.

Plus, other assets have a looming tax bill you might not be thinking about, like the family cabin or cottage. If the property is not designated as a principal residence, any growth or gain will be taxable eventually. And in the Canadian real estate market, that gain is likely enormous.

When someone dies, all their deferred tax liabilities become due.

Don’t forget that Canada has a progressive marginal tax system! As income increases, the tax rate goes up. With a $500,000 RRSP suddenly fully taxable as income, and a cottage with a $1 million gain (and other assets too) you might be looking at a $525k tax bill. 

There goes the family cottage to pay for it!

An estate plan can help plan and provide for these tax liabilities and develop strategies to reduce them.

Getting personal with probate

In Canada, wills must be probated. Probate is the process by which the courts formally accept the will as valid. It gives the person named in the will as “executor” the power to administer the estate. If you don’t have a will, the courts will appoint someone to act as your administrator. 

After the courts issue the grant of probate, the executor or administrator will have to pay the probate fees. In BC, this fee is 1.4% of the value of the estate (in excess of $50,000). This often gets confused with an inheritance tax or estate tax, but unlike the U.S., we have no such taxes in Canada. Another win for the northern team!

Many people know they want to avoid probate, but they want to avoid it for the wrong reasons. Often, they want to avoid the probate fee. In reality, the probate fee is quite small – the value of your investment accounts could swing by the same amount in a single day – and the true issue with probate is how lengthy and time consuming the administrative process is.

Your inheritors could be waiting over six months to receive any money as they wait for the grant of probate, so adding a plan to limit the assets exposed to probate is a smart move.

 

Estate planning is a crucial part of financial planning. If you’d like some support to discuss your estate planning, use our contact form to send us an email. We’ll get back to you soon to set up a meeting with one of our advisors. 

 

The information contained herein has been provided for illustrative purposes only. The information does not provide financial, legal, tax or investment advice. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made on the basis of the information provided in this document. Wellington-Altus Private Wealth (“WAPW”) does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  WAPW is a member of the Canadian Investor Protection Fund and is regulated by the Investment Industry Regulatory Organization of Canada.

© 2023, Wellington-Altus Private Wealth Inc.

ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION.

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.

Amy Sweeney

AMY SWEENEY

Associate

Amy was born and raised in Squamish, is David’s oldest daughter and now the newest member of the Sweeney Bride team. Many may recognize her as she has worked periodically for the team for over 20 years. For the past five years, she has gained administrative experience and more running her own business as a Kinesiologist after completing a bachelor’s degree in Kinesiology at the University of British Columbia in 2016. Now, Amy is officially ready to join the finance industry. Currently residing in North Vancouver, Amy spends all her “free” time raising Dave’s two wonderful grandchildren.
Liam Hill

LIAM HILL

Associate Investment Advisor

Originally from Sydney, Australia, Liam moved to the Sea to Sky region in 2013, leaving the beaches behind to embrace the mountains. He hasn’t looked back since and enjoys exploring the wilderness by both land and sea.

Liam’s unique strength lies in his capacity to adapt and fine-tune strategies to match the ever-changing financial world. He’s a passionate advocate for adaptability and flexibility, believing these traits are crucial for securing financial well-being.

Liam holds the Canadian Securities Course qualification and is currently pursuing the Chartered Investment Manager (CIM) designation.

He shares his industry knowledge and business skills to empower individuals, families, and businesses on their path to financial success.

Liam is committed to educating our clients about the financial services industry and helping them make the most of available resources to achieve prosperity.

SHARON FIELDS

Administrative Assistant

Sharon worked for Sweeney Bride from 2014 to 2016 and recently rejoined the team as an Administrative Assistant in 2021. She has years of administrative experience in a variety of industries including working in legal and accounting firms. She enjoys being detailed, organized and efficient. When not hard at work, she enjoys exploring the great outdoors with her dogs, playing co-operative strategy board games and relaxing while sipping a nice Craft beer.

Carrie Freitag

CARRIE FREITAG

Administrative Assistant

Carrie is the newest member of our team and is our Administrative Assistant. She has previous industry and administrative experience and her fascination with the finance industry is rapidly growing. Carrie moved to BC in 1994 from Ontario and never looked back. While not working she loves hanging out with her two kids, awesome cat Leo, and enjoys a competitive game of 21, and her gardens.

Katie Norton

KATIE NORTON

Associate

Katie is a Business Administration graduate who joined the Sweeney Bride team in 2016. She takes care of on-boarding as well as managing account administration for our existing clients. She works hard to ensure the clients feel supported throughout the on-boarding process and is always available to answer questions.

A BC resident since 1997, Katie and her husband moved to Squamish to raise their two girls. They enjoy all of the outdoor activities and natural beauty that Squamish has to offer.

Liz Woodsworth

LIZ WOODSWORTH

Office Manager

Liz joined the Sweeney Bride team in 2015 as office manager. She is the gatekeeper in the office and is the face that greets you as you come through the door. If she can’t help you, she will ensure you speak with someone who can. Liz is a long-time Squamish local; when not in the office she spends her days soaking up all that this town has to offer while chasing her two active boys. Liz brings her valuable organizational skills and enthusiastic attitude to the team. 

Janet Bride

JANET BRIDE

CFP®, CIM® | Senior Wealth Advisor

Janet Bride is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 15 years’ experience in the Industry Janet holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Janet grew up in Ontario and moved out to beautiful British Columbia in 1995 with her husband, Paul, who is an adventure travel photographer. Her passion is to travel the world. Always interested in exploring different cultures and landscapes, she is grateful to have traveled to over 50 countries across 6 continents. She also enjoys continuous learning, spontaneous adventures with family and friends, and an active lifestyle in the Sea to Sky. Janet is proud to be a Big Brothers Big Sisters Alumni member since 2004.

She is highly motivated by helping people reach their financial dreams by creating comprehensive financial plans for individuals & families. While using a holistic approach to wealth management, she specializes in tax strategies and her goal is to encourage savings and help build our client’s wealth for a healthy and prosperous future.

David-Sweeney

DAVID SWEENEY

CFP®, CIM® | Senior Wealth Advisor

Dave Sweeney is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 31 years’ experience in the Industry Dave holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Dave has lived in Squamish for most of his life. Married to his wife Donna, since 1987, they proudly have 3 lovely daughters, Amy, Danielle and Jamie. With his time in Squamish, it has allowed him an opportunity to become involved in many valuable groups.

Dave is a retired Captain of Squamish Fire Rescue after 35 years of service. Another passion was sports and he has been a coach for Squamish Youth Soccer Association where he dedicated 10 years to coaching girls Rep teams. Additionally, he is a former member and Treasurer of the Sea to Sky Community Services Board. Dave is a frequent contributor to Mountain FM’s Mountain Monitor, providing general advice and financial commentary.

Dave continues his volunteer work as Treasurer for both the Squamish Hospital Foundation and the Squamish Downtown Business Improvement Association. He is also a sitting Board member of the Squamish Community Foundation.

Professionally, Dave started his Financial Planning practice in 1994. After living through both his parents’ demise and witnessing what a lack of understanding they had, he realized what sound planning techniques could do to ensure that an untimely death did not destroy one’s lifetime work. For over 20 years, he has made it his passion to assist others in not facing the same plight.