No one likes to plan for their death. For most of us, it’s right up there with filing taxes, going to the dentist, or cleaning out the garage. But it’s not something you can afford to ignore if you want to minimize the confusion, stress, and costs for your family after you pass away.

Wills

First and foremost, make sure you have a will. If you die intestate (without a valid will), your estate will be distributed according to provincial laws, which may not be in line with your wishes. Dying without a will may result in paying more tax. And it may take longer and cost more money to settle your estate.

You should revisit the terms of your will from time to time, especially if your personal circumstances change. For example, if you got married, separated, or divorced since your will was last done, it may no longer reflect your final wishes. If you named an executor, or guardian for minor children in your will who subsequently passed away, you will need to replace them.

Having a will allows you to make any legacy plans, such as charitable bequests.

Powers of attorney

According to the Ontario Securities Commission, “a power of attorney is a legal document that gives someone else – in certain defined situations – the ability to take action and make decisions on your behalf. The only action they can’t take is making a will on your behalf.”[i]

Powers of attorney come into effect if you become mentally or physically disabled and are no longer able to make decisions about your personal property or personal care. Consider choosing a family member or close friend who would know what you would want under these circumstances.

Life insurance

Life insurance provides a tax-free cash payment to your named beneficiaries when you die and can help your family with a cash crunch, like paying off debts, paying probate fees and taxes, or covering day to day expenses as well as final costs like your funeral.

Taxes and probate fees

Proper tax and estate planning, including the use of trusts, can help minimize probate fees and income taxes on death. You may want to seek the advice of a tax expert.

Funeral, burial, or cremation

Funerals can be more expensive than you realize. It pays to do some research so that you’re aware of all of your options. Making choices about funeral services, cemeteries, caskets, limousines, and police escorts can be emotional after a death and may lead to over-spending. Pre-paying can lock in today’s costs, especially those that tend to go up, like cemetery plots, which are closely related to the price of real estate. Finally, some Canadians are opting for less expensive options like cremation.

Practical matters

Getting your affairs in order will greatly minimize the stress on your loved ones, which is already at high levels after someone dies. Consider compiling all of your financial, legal, and personal details in a workbook like the Departing Details Workbook. Everything from your will and recent tax returns, to information about bank and investment accounts, credit cards and safety deposit boxes, will all be available in one place when the inevitable time comes.

[i] https://www.getsmarteraboutmoney.ca/plan-manage/planning-basics/wills-estate-planning/power-of-attorney-basics/