The largest intergenerational wealth transfer in Canadian history will occur over the next decade, with baby boomers set to receive an estimated $750 billion in assets. Estate planning is now even more crucial to preserving your family wealth across the generations.
SHARING THE WEALTH
A 2014 study found that 75% of Canadians believe leaving an inheritance for their loved ones is important - but transferring wealth is not a simple case of documenting who receives what. Ensuring a smooth transition takes time, transparency, and tax considerations.
BEAR FAMILY DYNAMICS IN MIND
The decision to leave an inheritance may be simple, but the family dynamics involved may not be as easy to navigate. With a trend developing towards expensive legal battles, it’s crucial that you make your wishes clear. Bring your family together (with a mediator, if necessary) to have a frank conversation about your decisions and the reasoning behind them to avoid future feuds.
THINK ABOUT DIVISION OF ASSETS
One of the most difficult aspects of estate planning is deciding on division of assets. But, as you determine distribution, make sure you consider any financial gifts you may already have given, as well as differing taxation levels on asset classes. What may initially seem like an equal distribution may not turn out that way after taxes have been deducted.
TAKE YOUR HEALTH INTO ACCOUNT
No one likes to think about the possibility of mental or physical decline. But when it comes to estate planning, it’s a crucial factor to consider. Research has shown that the risk of dementia doubles every five years after age 65. It’s wise to prepare well in advance and regularly review your plan to ensure your wishes are understood.
DON'T FORGET YOUR TAX STRATEGY
You can have the best laid plans for distribution of assets, but without a well-structured tax strategy your heirs may find their inheritance significantly reduced. With a highly complex tax system, make sure you bring in a professional to establish how best to mitigate the effects of tax on your estate.
In the end, estate planning is about ensuring your wishes are respected and your assets are safeguarded for your loved ones. Consulting qualified professionals, such as your wealth advisor at SCU, will ensure you stay on track and do just that.
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