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Planning your estate

DFSIN - Planning ahead can result in considerable tax savings

Planning your estate means taking advantage of tax regulations now to diminish the financial impact on your estate when you die. Good estate planning can reduce the taxes that will need to be paid on the assets you leave to your heirs.

Before you start planning

  • Define your objectives with regard to your estate;

  • Consult an expert to help you structure your estate;

  • Review your will every 5 years to make sure it still reflects your wishes.

Step-by-step estate planning

1. Draw up a notarized will

Among other things, a will allows you to determine to whom you leave your assets and who will be your executor, i.e. the person who will ensure that the provisions of your will are carried out.

2. Choose a good tax strategy

The right strategy will mean less income tax payable at the time of your death. A testamentary trust prevents income generated by the estate from being added to the income of your heirs, and taxed at the marginal rate.

3. Take out life insurance

Life insurance can protect your loved ones by covering the amount of income taxes due at the time of your death and designating the person responsible for paying the taxes on the assets in your estate.

4. Use the savings vehicle associated with your universal life policy

The savings vehicle associated with a universal life insurance policy (exempt policies only) can increase the value of your estate. As with RRSPs and other registered tax-deferred plans, the savings accumulate in a tax-sheltered environment until the time of your death. The non-taxable earnings on your investments can be paid to your beneficiaries when you die with no tax impact.

5. Draw up a mandate in case of inability

A mandate of inability allows you to specify who will take care of you and your finances if you become unable to do it yourself.

Acting now can result in considerable tax savings for your beneficiaries. Careful planning will allow you to pass on the largest possible estate to your loved ones.