A WILL DOESN’T SOLVE EVERYTHING
Most people will benefit from a deeper understanding of
the interactions between the Will and the named beneficiaries
on life insurance policies and investments such as RRSPs.
A Will that is created without due consideration of the role
of named beneficiaries can mean that the desired outcome
cannot be achieved.
Your Will is not the be-all and end-all. It must work in
conjunction with how assets are structured to ensure that
your estate planning goals will be realized. This requires an
understanding of how all of this works together, and because
finances change over time, your plan needs to be reviewed on
an ongoing basis to keep it current.
Let’s take a look at one example:
Our subject is a woman in her 70s. Her husband has already
passed away. She has two children and two grandchildren.
She is a renter and doesn’t own real estate. She has $40K in
an everyday banking account. She has $300K in a Retirement
Income Fund (RIF), $100K in a Tax-Free Savings Account
(TFSA), and $250K in a life insurance policy. She has a Will
that says each grandchild gets $50K and the rest is to be
divided between her two children.
Here’s the problem: This outcome will never be achieved.
Why not? She has named her two children as beneficiaries
on the RIF, TFSA and life insurance policy. This means those
assets will be transferred directly to her children upon her
death and will never become part of her estate.
The only assets that become part of her estate are the $40K
she has in the bank. This will likely all go to cover the tax
liability on the RIF, leaving nothing for her grandchildren.
So, the intentions were great but the planning was not
effective.
Here’s the big takeaway: Do you know enough about how
all this planning works together? Finances change on an
ongoing basis. You need to review your plan regularly, gain
an understanding of how all of this works, and structure your
assets in such a way that your plan can be fulfilled.•
– By Andrew Brown, Brown Lawyers, Waterdown, Ontario.
BrownLawyersPC.com
26 Read + hear more: www.silvergoldmagazine.ca