No one wants to think about their death, however part of financial planning is to take this scenario into account so that your family is well protected and looked after in case you do die. Financial planning is also important to ensuring that your quality of life meets your objectives and that your family has a quality of life that is satisfactory.
This is the time of year to put everything in order and complete one of your new Years resolutions.
Without a will, what happens to your kids? to your wife ? How will they support themselves? What will they do when the bank will not release your assets, because there is no will? How will they pay the bills and buy groceries? These are just a few of the reasons why you need to have a will and what can happen if you do not have one. Basically you need to assume that all of your assets will be frozen until a government bureaucrat decides how your assets should be distributed.
Ten Financial Steps
When you pass away, your family should look after the funeral or memorial first, however the will should be consulted in case there are any special circumstances concerning the memorial that are mentioned in the will, but then they’ll have to focus attention on finding a copy of your will. Make sure your will is up to date and make sure your executor knows where to find the executed copy, and knows which lawyer prepared it for you. Having this information available makes their job much easier in an already stressful situation.
Your executor will have to gather information on what assets you owned at the time of your death. Prepare a complete list and update it annually. Tell your family who your financial advisers are since they will likely need them for help in dealing with your assets after you’re gone.
Your family will be in a fragile state emotionally when you pass away. It will be difficult for them to negotiate funeral costs at that time. Solve this issue by planning your funeral today or delegating someone who can carry out the families wishes. You can even prepay for your funeral if you want. Visit a local funeral home to discuss it.
If your spouse shares a bank account jointly with you, they will be able to access the cash immediately after you pass away. Joint bank accounts make sense for this reason. Consider making the bank account(s) used for day-to-day expenses joint accounts. Also, ensure that any corporation bank accounts have more than one signing officer so that those accounts can be dealt with efficiently.
Make sure your family knows who your insurance adviser is. Further, make sure at least one insurance adviser knows about every policy you might own, and ask him to keep a record of this information for you.
Three types of benefits may be available to your surviving family members. If you’ve contributed to the Canada Pension Plan, there will be a death benefit (a one-time payment, to a maximum $2,500), a survivor’s pension (a monthly pension paid to your surviving spouse, averaging about $300, but which can be as high as about $560), and a children’s benefit paid to a surviving child (a monthly benefit of about $215 a month per child under age 18 or up to age 25 while still a student). Your family must apply for these benefits after you’ve gone.
Any registered retirement savings plans or registered retirement income funds owned by you at the time of your death can generally be transferred on a tax-free basis to a registered plan in your spouse’s name (or to a dependent who is a minor or has a disability). Simplify things for your heirs by reviewing your named beneficiaries on these plans today to ensure the right people will receive these assets when you’re gone.
Your family should call your employer to determine whether there are any amounts owing, such as salary, vacation pay or bonuses. They should also inquire as to whether the employer can pay any amounts as a tax-free death benefit (up to $10,000 can be received tax-free where it is considered a death benefit in recognition of an employee’s service). Let your family know who they should contact at your office in the event of your passing.
Have you purchased insurance to pay off your debts in the event of your death? If you’re insurable, make life easier for your family by doing this. Term insurance (the cheapest) is just fine if the debt has a term to it and is expected to be paid off in the future.
Summary of information
Much of the information you’ll want to provide about assets, contact names, and so on, should be summarized in one document. If you do not have a document template, search for one on the internet or ask your lawyer or funeral home if they can provide a document for gathering this information.