Estate planning is about much more than money

What it is not

What it is

Sample issues

How to tackle them?

When talking about various personal financial matters, it is rather easy to commit the mistake of seeing only the trees instead of the forest. At such times, the whole world gets simplified and quantified; we are dealing with numbers, rates, returns, amounts, costs, and probabilities, ... suggesting perhaps that we do not necessarily have to answer the really big qualitative, emotional, or motivational questions that are the driving forces of our lives. However, these come up unavoidably when we turn to estate planning. Many people think that estate planning is about merely will-preparation, something separate from detailed financial planning. It is a gross and dangerous misunderstanding and oversimplification to hold this view.

Estate planning encompasses our whole life, its various aims and characteristics at sequential stages as they unfold, and, very importantly, intergenerational issues. In other words, it is usually long-term and also very value- and emotion-driven. At the same time, it also has to be built on the realities of not just our emotions and values, but on our total assets and liabilities, both of the human and the financial kinds. It is about our whole life strategy, with a special financial focus, in the shadow of the unknown future, and government interference. While in the very narrow (therefore mistaken) sense estate planning is about wills and estate transfer, in a very broad sense, estate planning is almost the same as personal financial planning, a 'primus inter pares' among the components of financial planning, since it often at least touches on every other aspects of it, such as investing, retirement planning, risk management, etc.

What are our aims in life and how can we create the financial conditions to achieve them? How much control do we want? What lifestyle should we strive for? What is the investment strategy we should commit to? What level of education do we want for our children? When, how, and where do we want to retire, ... and how do we want to spend our years in retirement? What if unexpected misfortune affects us? Are we, or others we are responsible for, well protected? Who do we want to have the right to make decisions on our behalf should we get incapacitated or when we die. Who should be the guardian of our children if we drop dead tomorrow? Is it important for us to help our parents, our /grand/children, or somebody or some cause financially while we live and/or after our death? What can be the financial consequences of breakdowns in our relationships? Do we care about how much of our income and assets go to Revenue Canada, either while alive or after we die, ... and what can we do about it? Do we want to prevent that our business, the cottage, or other asset become a divisive issue among our children when we are gone? These are just sample questions about issues that come under the purview of estate planning.

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How to tackle the issues?

It is not hard to see how complicated each of the above issues can be, and it is especially true about their interrelationships. It is full blown personal financial planning what is needed here; not just partial solutions, but a holistic view and preparedness. In fact, it takes a team of professionals (at least a financial planner / advisor, and a lawyer, but often also an accountant, a tax-specialist, a stock broker, an insurance broker, etc.) to be able to to provide the expertise and service most people need.

The solutions used to solve estate planning problems can encompass, among others, wills, powers of attorney, various (buy-sell, pre-marriage, divorce, etc.) contracts, inter-vivos or testamentary trusts, investment portfolio restructuring, estate-freezes, various tax-advantaged retirement strategies, and other insurance-based arrangements. Different issues are in the focus of estate planning at various stages of life: First, the emphasis is on creating and accumulating assets, followed by a focus on managing, preserving, and conserving the estate, ... and finally, most effort is devoted to to the issues around transferring it. All the way, special attention should be paid to ensuring not just the size, but also to the liquidity of the estate. Because of this latter aspect, balanced management of income and expenses and various insurance solutions are important building blocks of any estate planning and managing strategy.

These web pages are for information purposes only. The information contained and presented, while based on and obtained from sources we believe to be reliable, is not guaranteed either as to its accuracy or completeness. The content of these web pages is solely the work of the author, Laszlo Kramar.

The views (including any recommendations) expressed on these pages are those of the author alone, and they have not been approved by anybody. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any product discussed or referred to in these web sites. These web pages are for educational purposes only and are not intended for use by residents of the United Sates; nor are they intended as an offer or solicitation in any jurisdiction outside of Ontario, Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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