There’s a common misconception that only the wealthy have estates. After all, the word “estate” has historically been used to signify a large parcel of land, a piece of property that might contain a mansion, outbuildings and supporting farmland. The word also has a secondary meaning, indicating status. So, it’s no surprise that most people equate an estate with wealth.
In reality, though, everyone 18 and older has an estate – or belongings and assets. The person heading into college. The person starting their career. The family struggling to make ends meet, the single mom or dad. Any and all possessions, regardless of their value, constitute an estate. Add to that the fact that there’s a lot more to estate planning than accounting and planning for your assets. A number of critical medical and parental decisions are also part of this endeavor.
WHAT IS AN ESTATE PLAN?
As I noted above, your estate is the sum of everything you own, everything that belongs to you and everything that makes you who you are. Of course, that’s all the money you have – liquid or non-liquid: cash; financial tools (RRSP, TFSA, pension, investments); and any property, vehicles and possessions. But it’s also anything that you’ve created or written, your intellectual property and your ideas. Further still, it’s personal memorabilia – like family recipes, photos, stories or traditions. It’s everything that makes you you.
If all of this is your estate, then an estate plan is creating an intention for what you want to happen to all of this when you’re no longer here. How do you want to preserve your legacy? How do you want to disburse your belongings? These are important questions, no matter your age, for the end product of all this thought and work is how you are remembered by those you love.
There’s more to an estate plan than indicating what you want to happen to your stuff. Arguably, these decisions might be even more important than those you make about how you divide up your property.
This is something everyone should have – absolutely everyone. It’s a document that lets family and medical professionals know what actions you want taken – or not taken – to keep you alive in situations where you’re incapacitated and can’t advocate for yourself. Think Do Not Resuscitate (DNR). It’s called an Advance Healthcare Directive because this document allows you to make decisions for yourself when you are no longer able to in advance of the situation arising that left you with that inability. If you’re 18, you’re legally an adult, and your parents don’t necessarily have legal say in your care just because they’re next of kin. Same goes for a spouse. Also, your next-of kin’s wishes and your wishes might not necessarily align, particularly in a time when emotions can overtake conversations you may have had about the care you want to receive. The best way to ensure your wishes are carried out is by creating an advance healthcare directive.
A durable power of attorney or healthcare proxy allows an individual to access your medical records and make medical decisions on your behalf.
A durable power of attorney is a document much like the above; it designates someone to do the same thing as a healthcare proxy but for the financial side of your life. This agent makes financial decisions when you’re incapacitated – not to be confused with an ordinary power of attorney, which is only valid so long as you’re capable and ends as soon as you become incapacitated.
If you have children or anyone who relies on you, you need to think about their future. Who will take care of them in your absence? You’ll want to make sure the guardian you choose is responsible and has your child’s (or younger brother’s or elderly mother’s) best interest in mind. Think about if their values and beliefs align with yours. Are they caring for anyone else already? Picking a backup guardian is always a good idea. Take your time; this is a big decision.
Question is do you have your estate planning, which cost almost nothing with knowledge. We suggest, plan before it is too late. Connect us for any question.
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