Why You Need an Estate Plan

Posted 24 Feb 2015 by Rick Irwin, CFP, CLU


One of what I consider to be the most important aspects of my job is to provide advice on estate planning matters. What will happen to your assets when you pass away? What can be done to ensure that your loved ones retain as much as possible of the estate value?

Estate planning is generally guided by three rational motivations:

  1. Provide adequately for family members and/or other loved ones
  2. Ensure that your estate is distributed in the most timely manner possible after your death
  3. Lower taxes – during your lifetime and, equally important, for the beneficiaries of your estate

In addition, there are three emotional motivations that guide the estate planning process:

  1. Knowing your loved ones are well looked after
  2. Knowing that settling your affairs will not add more stress to those grieving for you
  3. That your estate will be distributed the way you wish
Step One: Your Will

The first step of course is to have a valid will. If your will hasn’t been updated in some time it may be worth a review, to see if an executor needs to be updated or if your personal, or your family’s situation has changed.

Step Two: Name Beneficiaries

Secondly you may wish to review your financial accounts to ensure that any beneficiary designations are up-to-date and in agreement with the wording of the will. If you hold investment contracts that do not normally allow for named beneficiaries, such as GICs, stocks or mutual funds that are held in “non-registered accounts (ie not RRSPs/RRIFs or TFSAs) you might consider changing these investments over to GIOs or segregated funds, which are comparable investment products offered by insurance companies, especially as you get older. GIOs and segregated funds offer specific benefits not available through non-insurance, non-registered financial products. These include the ability to bypass probate through naming specific beneficiaries, potential creditor protection and death and maturity benefit guarantees.

Step Three: Consider Insurance-based Investments

Another approach is to consider investing non-registered funds into a form of life insurance policy that allows for over-funding. The investment gains inside the policy can be completely tax-free if they form part of the death benefit to your loved ones. Melissa has written about this in the past and would be more than happy to discuss in more detail.