According to a 2018 Angus-Reid poll, just over half of Canadians (51%) don’t have a will in place. Of the remaining Canadians that do have a will, only 35% of those wills are actually up to date.
Did you know?
Registered Retirement Saving Plans (RRSPs), Registered Retirement Income Funds (RRIFs), and other registered accounts often present the biggest tax liabilities if you die without a will, because all of their assets are considered fully taxable upon death. In Ontario, this means the combined federal and provincial taxes can be as much as 49.53% on registered investment income exceeding $220,000.
In Canada, it is estimated that unclaimed assets amount to over five billion dollars. In Ontario, these assets tend to remain “lost”—since there is no unclaimed property legislation or databases where family members can search for assets that belonged to loved ones who passed away.
From bank accounts and investments to all owned real estate—the best way to ensure nothing gets lost after your passing is to keep an updated list of all of your assets.
Assets include but are not limited to the following:
Every active member of the Ontario Teachers’ Pension Plan (OTPP) or Ontario Municipal Employees Retirement System (OMERS) should designate a beneficiary to ensure your benefits are paid according to your wishes, should you die before you receive your first pension payment without an eligible spouse.
This can be anyone in your family or an organization or charity—just not your spouse. You can choose as many beneficiaries as you wish, keeping in mind that any pre-retirement death benefit will be divided equally among all of your chosen beneficiaries. Since an eligible surviving spouse will automatically receive your survivor benefits, the reason for designating a beneficiary other than your spouse is in the event your spouse passes away before you do.
Did you know?
If you are an OTPP member and enter into a common-law relationship or get married after receiving your first pension payment, your new spouse is not automatically entitled to a survivor pension. You must apply and take a reduction to your pension in order to do this. In addition, there must not be a previous spouse eligible for a survivor pension. For full details, contact OTPP or visit their website.
The only way to ensure your assets are divided according to your wishes is to designate a beneficiary. It is especially important to keep your list of beneficiaries updated in the event of any changes to your family situation.
For example, if you were separated or divorced from your spouse at the time of your death, but had your ex-spouse listed as a beneficiary, they would still be entitled to any assets originally bequeathed to them. If you want to change beneficiaries at any time, you must always complete a form to change the designation.
Note that beneficiaries can be designated on registered accounts only (such as RRSPs and RESPs). For non-registered assets, beneficiaries would be listed in a will (hence the importance of #1—having an updated will).
If you still carry a mortgage on any of your properties or have outstanding balances on credit cards, loans, and lines of credit, capture all outstanding debt along with the names of the financial institutions and creditors. This will ensure your beneficiaries are not caught by surprise and can settle any amounts owing using estate funds to prevent your estate from being taken to collections.
From car insurance and rent/mortgage payments, to credit card and utility bills—having enough cash in your asset pool to cover bills upon your death will preserve the value of your estate and avoid incurring a forced sale of assets in order to cover any outstanding bills. This would only prolong the distribution of assets even further.
Nobody likes to think about the worst-case scenario. Yet in the event that you ever become incapacitated and unable to make decisions for yourself in regards to your personal wellbeing and assets, you’d want you and your family to be protected. A Power of Attorney enables you to assign someone the authority to make those decisions for you. This person can be a spouse or other family member—or even a trusted friend.
Power of Attorney for Personal Care: Assigns the power for your designated person to make decisions in regards to your health care, housing, and other aspects of your personal life (e.g. meals, clothing, etc.).
Power of Attorney for Property: Assigns the power for your designated person to make decisions about your financial affairs, should you no longer be in a position to do so (such as making bill payments, cashing cheques, managing investments, etc.).
It’s one of the smallest details of estate planning, yet potentially costly as lawyers can charge up to $150 or more to notify clubs and organizations to cancel your memberships upon your death. Providing this list to family members/beneficiaries will save your estate from unnecessarily paying for something that can be done for free.
People move. Weather happens. All of those precious estate-planning documents are only good if they’re in one piece and in one easy-to-find place. Whether by safely storing them at home or securely locking them away in your bank safe deposit box, keep all estate planning documents somewhere they will be protected (and be sure family members know where that place is). Also consider leaving a duplicate of all documents with your main beneficiary as an extra precaution.
A lot can happen in a year. Getting into the habit of reviewing your estate plan annually will ensure all information contained within is always accurate and up to date.
In summary, keep your estate plan in check by following this 10-step checklist:
1. Have a will—and keep it up to date
An estate plan needs to take a variety of factors into consideration. As an education member, there is the added factor of your pension to consider (i.e. what happens to your pension benefit after you pass away).
Since 1975, Educators Financial Group has been providing education members with sound financial plans for every stage in life. It is the kind of history that has provided us with a thorough understanding of how your pension works, how much income you can expect from it in retirement—and what kind of plan you should have in place to protect it.
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The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Please ensure to consult your accountant and/or legal advisor for specific advice related to your circumstances. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information. The information presented was obtained from sources that are believed to be reliable. However, Educators Financial Group cannot guarantee their completeness or accuracy.