For many Canadians, the most difficult part of determining how wealth will be distributed after death is to understand the complexities of estate planning. There are a number of misconceptions that misguide people and make them take wrong decisions. Statistics reveal that less than 50% of Canadians have a valid estate plan.
There are so many things that may come to mind when thinking about estate planning. Most of them are nothing but misconceptions and myths. What follows are some of the common estate planning misconceptions and why you should not consider them:
The government will take all my wealth if I have no Will
First of all, make sure you have an updated Will explaining how your assets should be distributed after your death. If you die without leaving a Will, the government will not take your wealth. However, the court will decide how your assets should be distributed to your family. Your spouse or your next kin will likely inherit your estate. Another misconception is that your spouse will inherit everything if you have no Will. This is only true when you don’t have children. If you have children, your wealth will be shared between your children and your spouse provided your estate is over a stipulated size.
There is only one type of Power of Attorney
A power of attorney allows you to authorize someone to make financial and legal decisions on your behalf when you become incapacitated. The power of attorney can be either temporary or durable. The health care power of attorney is a different document that allows you to authorize someone to make healthcare decisions on your behalf in case you become incapacitated.
Estate planning is for old people
Many people think that estate planning is only for old people. It’s a fact that people start thinking about estate planning when their age puts them closer to the reality of death. However, someone doesn’t have to be old to die; many people die at young ages. This is the reason why estate planning should be a part of your financial affairs regardless of your age. Estate planning is even more important for people who are married and have children.
Estate planning is for the rich
It is also a misconception that you have to be wealthy to plan your estate. Whether you have significant wealth or not, your wealth needs to go somewhere. Whether you earn $25,000 per year or $250,000, you have to pay taxes. Your wealth can become a source of conflicts within your family. Therefore, you need an updated Will no matter how rich or poor you are. Conclusively speaking, estate planning is essential so don’t wait to get started.
“Estate planning is an important and everlasting gift you can give your family. And setting up a smooth inheritance isn’t as hard as you might think”. – Suze Orman
About Kewcorp Financial
Kewcorp Financial is a team of highly experienced financial planners in Edmonton. We help people streamline their estate planning and other financial affairs such as tax and retirement planning. Contact us for more information!