Estate planning can be an overwhelming process, often riddled with fears that have never been addressed by anyone in advance of needing them discussed; fear about widowhood, deathbed wishes not being honoured and regrets over lost opportunities when it comes time to divide assets between heirs. These anxieties typically keep individuals from starting the conversation on their end until it becomes too late!
Below are 4 common concerns and how they may be addressed.
Concerns over mismanagement or lost motivation
Parents are often worried about how much money they should leave to their children and the fear that it may well be squandered or fall into unscrupulous hands. Parents often also worry that if a large inheritance is given, then their child may lose motivation to work hard because with a large inheritance there would not be any need for effort in life or educational pursuits. These aren’t unfounded fears but proper planning can usually address these concerns.
A bequest to a beneficiary is an incredible responsibility that some people are not ready for. As such, vehicles such as Trusts can help transfer wealth without burdening the heir with all of the inheritance at one time. While trusts are a wonderful tool for inter-generational wealth transfer, there can be drawbacks too, such as cost and complexity. Benefits and drawbacks should be carefully weighed before setting one up.
There may be concerns over privacy
The public can access your will when it is submitted to the court for probate. With this information, fraud artists could potentially get a hold of sensitive personal and financial data that was previously out-of-reach.
According to new research, one in every 20 wills made available at courthouses had been altered by someone other than its maker – either intentionally or unintentionally – with potentially disastrous consequences for those named as well as their heirs.
To alleviate such privacy concerns and hide assets from the public eye or avoid probate fees and taxes a planner may advise their client to invest in insurance company products like segregated funds and life insurance. These products are able to bypass court proceedings through a private transfer outside of the courtroom because they skip probate all together. Without these details being accessible publicly it is difficult for anyone but those directly involved with the process to know the details of the estate.
Concerns over taxation and fees
The value of an inheritance can be significantly diminished by taxes, and there are many fees that need to be considered. The cost of executor’s fees is just one example; add in other expenses like legal and accounting services as well as the tax implications for how much your estate will shrink when you pass away – it really adds up quickly!
What does death have to do with taxes? The federal government and many provincial governments in Canada impose a variety of estate or inheritance taxes. These may be avoided or reduced by leaving specific assets, including RRSPs and RRIFs, to a spouse instead of another beneficiary. Other costs to the estate can also be reduced through careful tax planning that may involve selling assets before death or transferring them to beneficiaries before death!
Concerns over capital loss or depreciation
Investors often worry about where they should invest their money; everything from inflation rates, return rates, management fees right down to the investment decisions themselves can affect how much a portfolio will be worth at any given time. For these reasons, many investors prefer safer strategies like investing in more traditional or stable companies, but it’s important to note that there are risks associated with all types of investments…Some greater than others!
A financial advisor can help you make the right decisions based on your estate planning needs and goals. Protecting an inheritance or bequest may be as simple as utilizing investments that provide a guarantee of capital such as segregated funds or permanent life insurance. These are excellent investment vehicles which can ensure that the value of an investment does not fall below certain minimum values by either guaranteeing death benefits or including maturity guarantees at set periods in time.