Creating an Estate Plan Ensures Your Assets Will Be Distributed As You Intended

Many people put off creating an estate plan because it causes them to face the eventuality of their own death. While no one enjoys thinking about their demise, it is necessary to do so to be sure your loved ones receive the property you intended for them, in the manner and at the time you intended.

The foundations of any good estate plan are a durable power of attorney and a will. The durable power of attorney allows you to designate someone to manage your financial affairs while you are still living in the event you cannot do so yourself. A will spells out the specifics about the management and distribution of your assets after you die.

You are never too young to start developing your estate plan. Even if you don’t think you have enough property to be concerned about distribution, you may have other “assets” like your children whose future you need to protect. The following list provides some important reasons to consider creating an estate plan:

- Choosing whom you want to manage your affairs if you are no longer able to do so – Without an estate plan the courts will designate the person who manages your finances.

- Selecting a guardian for your minor children – An estate plan gives you the capability of selecting your children’s guardian. Without it, the court will make that decision.

- Deciding who will receive your property – If you die intestate, meaning without a will, your assets pass to your heirs according to your state’s laws of intestacy.

- Distributing assets among children from different marriages – If you have children from different marriages, you will need an estate plan to ensure an equitable distribution of your property among all of your heirs.

- Providing care for children with special needs – An estate plan allows you to establish a Supplemental Needs Trust, which enables a special needs child to remain eligible for Social Security and Medical benefits while using the trust assets to pay for non-covered expenses.

- Keeping assets in the family – If your married son/daughter dies prematurely, their spouse could inherit your money if there is no estate plan. If your child divorces their spouse, half of your assets could go to the spouse. If you have an estate plan, you can establish a trust that ensures that your assets will stay in your family and pass to your grandchildren.

- Providing income replacement for your loved ones – Part of your estate plan should be purchasing enough life insurance to provide a replacement of the income you provided your family while you were alive. This will help your family maintain their current lifestyle.

- Selecting the beneficiaries on your retirement accounts – The beneficiary on your RRSP or other retirement accounts can be changed after your death by the executor of your estate if you don’t have an estate plan. It could also result in serious tax consequences for your heirs.

- Planning for a successor in your business – Without a plan, you probably don’t have a legitimate successor, which could cause your family to lose control of the business.

- Avoiding probate – Without a plan, your estate may be subject to probate delays and excess fees.

Leave a Lasting Legacy with Life Insurance

Life insurance offers a benefit that many people don’t even realize which is the benefit of enjoying your retirement savings. You might not see the connection between a life insurance policy and retirement, but there are actually two ways in which this coverage can help you relax and enjoy your retirement years:

a) Life insurance can provide a legacy to your heirs.

b) A life insurance policy with sufficient cash values can be used for supplemental retirement income.

Life Insurance Benefit 1: Legacy Planning

Without life insurance, the only way to leave behind a legacy to your heirs is by preserving some of your net assets for their inheritance. That means instead of enjoying your retirement by traveling, shopping and relaxing you must be ultra conservative about your spending. You need to budget carefully, sacrifice your own enjoyment and not only make sure that you don’t over-spend your retirement savings, but ensure that you under-spend it. When there are fluctuations in the market and your retirement account balances begin to fall, legacy saving adds additional stress to the situation and can even result in resentment of those you once wanted to leave a legacy to.

With life insurance, you never have to worry about legacy planning. Your heirs will inherit the life insurance death benefit proceeds and they won’t contend with the hassle of probate, estate taxes (if structured properly) or fluctuation in estate value based on the market. The best part is that you don’t even need a high cash value life insurance policy; you can obtain a permanent or term insurance policy that offers only a death benefit–either way your needs, goals and objectives are covered.

Life Insurance Benefit 2: Supplemental Income

There may come a time during your retirement when you need an extra source of cash to tap into. For example after sustaining losses in your retirement account, to help a friend or family member through a difficult time, or to help you bridge a small financial gap. If you do need a loan, who better to borrow money from than yourself? When you take a tax-free loan from the cash values of your permanent life insurance policy, you pay interest back to yourself—not to a bank, but to your own policy.

If you are unable to pay off the loan before your death then your death benefit will be reduced by the outstanding loan value. That means you can borrow money, not pay it back and still leave a legacy (as long as the policy doesn’t lapse due to insufficient values). Because significant cash values can take years to accrue, the time to buy a life insurance policy for tax-free retirement income is now.

Whether you are concerned about the financial stability of your investments or you simply don’t want the stress of trying to under-spend your retirement savings, a life insurance policy could be the right answer for you.

A Must-Have for the Self-Employed

Being self-employed definitely has its perks: freedom, flexibility, autonomy. Unfortunately, the long list of self-employment benefits doesn’t usually include an actual benefit plan. That means you’re on your own when it comes to insuring yourself.

If you’re self-employed and don’t own life insurance, you’re putting your family at great financial risk. Not only would a life insurance policy provide for your family if something were to happen to you, but it would also cover the costs of your business debts.

Everyone needs life insurance

Any financial expert will tell you that whether you’re self-employed or company-employed, you need life insurance—especially if you have a family who depends on your income. As long as you’re alive and kicking, you can continue to earn money and maintain your family’s lifestyle. However, if you were to die without life insurance, your family may find themselves in a financial crisis.

Without your income, your family certainly wouldn’t be able to maintain their former lifestyle, and they may have a hard time making ends meet. They would probably struggle to pay monthly expenses, including the mortgage, credit cards and utilities. On top of that, they could face some hefty bills associated with your death, including burial and funeral costs and medical expenses.

An effective life insurance plan will ensure that all of your family’s financial needs will be covered in the event of your death—from the monthly mortgage to final expenses to your child’s college education.

A necessity for the self-employed

Although everyone should have life insurance, it’s an absolute necessity for the self-employed. Why? In the eyes of the law, there is no difference between your personal and business assetsm, if you are a sole proprietor. That means that you are personally responsible for any and all business debts.

When the owner of a sole proprietorship dies, the business legally comes to an end. Therefore, if you were to die, any of the debts or losses associated with your business will become the responsibility of your estate. This could include business loans, your office mortgage or lease payments, local, state and federal taxes, lawyer and accountant fees and any payments due to your employees, suppliers or vendors.

To pay off these debts and cover your business’ financial obligations, your family may have to sell off personal assets. This would leave them with even less money to cover their ongoing financial needs.

However, with an effective life insurance plan, your family would have enough to pay off these business debts and provide for their ongoing financial needs after your death. This is why it’s crucial for any self-employed person to have a life insurance plan.

Meet with a financial professional to discuss your life insurance options. He or she can assess your situation and find a plan that fits your unique needs as a self employed.

Live with Purpose

Deep down in our hearts, we want to live our lives meaningfully and with a purpose. You know what is most important, which is your heartbeat. In fact, how you live each day expresses your mission and values. Discover your principles.

Create a mission statement for your business. A clear statement can build unity, purpose, commitment, and clarity of vision—all of which are vital to your business’s success.

Write a family mission statement-identify what kind of family you want to be, what qualities define your family, what kinds of feeling do you want in your home, how do you want to build relationships?

Check out the FranklinCovey Mission Statement Builder to help you create your personal, family, and team mission statements.

The 21st century brought more than a new millennium to experience. Over the last two decades, inflation has continually outpaced wages and income and this trend shows no sign of slowing. This inverse relationship between wages and costs means that you need more dollars each year to purchase the same items as you did the previous year. Financial and estate plans are not impervious to the pressures of inflation. Here are three aspects of your financial plan that you should consider adjusting:

1) Spousal income replacement

With the advent of telecommuting, dual income households seem to be taking over the landscape. For some, higher levels of household income have permitted better lifestyles. For others, two incomes barely get the bills paid. If your budget and lifestyle are dependent on two incomes, you should review your life insurance coverage and make sure that both wage earners are insured. You, your spouse, and your family may be in financial jeopardy if your insurance plan has not been recently updated.

2) Purchasing a new home and taking out a mortgage

Today, many homes are purchased with the help of a substantial mortgage. If you or your spouse suffered an untimely death, would your current life insurance be enough to pay off the balance of your mortgage? It’s important to make sure your life insurance policy’s death benefit provides the necessary funds to accomplish your goals–protecting your family’s lifestyle.

3) College education costs

If you have college education plans for your children, you may be concerned about the rising costs of higher education. As indicated by Statistics Canada, tuition fees have risen steadily since the mid-1970s. The $609 average annual tuition fee for an undergraduate arts programs in 1977 has more than eight times to $5,138 in 2010-11. Putting money aside for your child’s education requires a long-term financial commitment and a disciplined approach to saving. However, it also requires a contingency plan in the event of an untimely death. For this reason, you may want to include all or part of the projected education costs in your insurance plan.

Life insurance planning doesn’t end with these three scenarios. In fact, you may have additional goals you want to hedge against in the event you or your spouse suffers an untimely death. Adjust your life insurance coverage for inflation to ensure your wishes will be fulfilled in the future.

In my everyday work I meet with different entrepreneurs and self-employed business owners at various stages of their business. This article intrigues me as it answers a common question often business owners face: Paying Yourself

As suggested in this great article the two most common theories for startups are:

1. Pay yourself enough to get by.
2. Pay yourself what you are worth.

Thereafter when sales reached break-even, any increase in pay above the the fixed salary could be tied to the growth of the business. That is the excitment of running your own business with the reward of increasing your compensation proportionate to your business growth. With the increased performance of your company, do take into consideration rise in overhead which will increase on an annual basis due to inflation alone.

Ultimate objective in paying yourself first gives you the excitment of entrepreneurship.

So much has been said about demographics and understanding each generation’s value system. Do you know where you belong:
Baby Boomer (1947-1966), Generation X (1967-1979) or Generation Y (1980-1995)

But there is the sandwich generation, a growing demographic within the baby boomers “sandwiched” in the middle, caring for two generations as a caregiver to both parents and children, exacting both emotional and financial tolls.

This article highlights the struggles – ‘ Sandwich generation’ saddled with care of elders and children

Planning is key. Legal documents such as continuing Power of Attorney to allow an adult child to make financial decisions on their behalf, as well as a personal-care Power of Attorney for future medical decisions.

According to Statistics Canada, we are made aware that 1 in 5 Canadians is providing care for an elderly parent or close relative.

Who will need long term care?
How will it affect my finances?
Where will I get this money?
Freedom to chose the kind of care I want?

It is of great importance that solutions are in place for anyone concerned about exhausting your savings, investments and assets to pay for the type of care you want. It gives you added peace of mind in retirement.

Ever wonder what would happen if you suddenly became critically ill?

Would it affect your lifestyle, your planned vacation or get away?

Who would take care of your living expenses?

Would you have to dip into your assets to take the time you needed to recover?

How would it impact your family, loved ones or your business?

A recent article summarises just how important it is to plan for the unexpected. A health crisis could derail your retirement plans. The only way to predict the future is to create now. In my experience often we think we are too young or it wont happen to us. The reality is illness has no respect of age and time.

It has been extremely difficult to share how a multiple stroke has affected my dear brother in law. It has been more then 3 years now since that day in Feb 2008 where he became and still is totally dependent on care. Without the support of family, children, siblings how could we ensure he has the best loving support and dignity he so deserves.

In my quiet moments my fondest memories of him was a China trip together just after marrying off his second daughter. Truly as “caregivers we often suffer financially and psychologically caring for loved ones.”

Read another life story on ‘Tsunami of strokes’ likely to hit Canada’s aging boomers. We must plan now as it is well said ” It’s not only my father’s stroke. It’s my family’s stroke.”

Statistics by Canadian Cancer Society show that B.C is the leading country in the fight against cancer. This is good news that we are definitely doing something right! Our healthy lifestyle is paying off. It is also good to know the real statistics and how real it is close to home. Have you ever wondered by the numbers…

1) What percentage of death is contributed by cancer?
2) Does the risk increase with age?
3) Are females fighting stronger then the guys?
4) What are the most prevalent types?

Read more on how B.C leads in fight against cancer

While Financial Toll of breast cancer - highlights the financial impact of losing income because of time off work for treatments and recovery, plus related out-of-pocket expenses. Others had to quit or go on disability leave because the side-effects of treatment, fatigue and pain prevented them from doing their work.

Drugs taken outside of hospital settings are not always covered by public health plans, so patients either pay out-of-pocket or through private insurance, if they have it. Wigs, prosthetics, child care, and even paying for parking at health-care centres were also cited as extra financial costs by the women surveyed.

” You have to go into your savings, it puts a burden on the whole family.”