Generating Wealth through Proactive Estate Planning

Entepreneurs recognize that life, like business, has risk. Wealth creation requires that one manage risk and safeguard legacy through effective estate planning. Most entepreneurs never stop building, they are always looking for the next opportunity, and as such it is never to late to start planning to effectively manage assets and protect our legacy. 

You do not spend a lifetime building wealth to lose it to a failed venture, your child's failed marriage, or an unanticipated civil claim. We often take on risks later in life. Some sit on boards, have professional liability that can not be addressed through insurance, or are worried about being the target of an unscrupulous individual taking advantage of us as we age.  Effective estate planning ensures that assets are protected for you and your family.

Implemented through our Will, a testamentary trust can address many concerns in our estate. Ensure that assets are protected for your spouse, protect assets from your child's spouse, manage assets for beneficiaries that may not have the financial capability, protection of assets for minors or disabled family members are only a few examples. 

Protection and management of assets and the mitigation of tax are the primary motivators behind trusts which are created during our lifetime. Alter ego and Joint Partner trusts when we turn 65 eliminate probate and its fees, protect assets as we age, and ensure that our children and not those of a subsequent spouse receive our assets. Family trusts are often utilized to mitigate tax, ensure that several family members can benefit from a business while ensuring its control and management is in the hands of those that are capable, and preserve significant estates so that generations of our family can benefit from a legacy.

To build weath, you need to minimize tax each and every year. To preserve wealth, you need to ensure that terminal taxes imposed when you pass do not threaten the viability of your business or otherwise threaten your legacy. Proactive estate planning can shield your estate from tax.

Estate freezes and other strategies allow control over assets while one is alive. Efficient tax strategies are the outcome of proper estate planning. 

Asset rich and cash poor. This is a common challenge. Often our business is the asset that supports our family during our lifetime and is the most important asset in our estate. How will it be managed? How will the business benefit those family members that are not active in the business? What is fair vs. equal in the distribution of our estate? Is there a way to leave a legacy for children that did not contribute to or do not want to work in the business? The answer changes throughout our lifetime and effective estate planning will address these issues so that the business does not become a point of contention in our estate. 

Every individual needs a Will to distribute assets on our passing. The Living Will (health care directive and power of attorney) stipulates who and how decisions will be made on our behalf in the event of an accident or health condition that eliminates our ability to make these decisions.

It is also important to recognize the limitations of our Will. It is not a tax plan and drafted improperly may lead to additional unnecessary tax and complications for your estate. You spend a lifetime building your estate, take the time to ensure that your Will is the right tool for your family.

Locating and managing assets until distribution, the application for probate, filing the terminal tax return, and identifying opportunities to minimize tax are a chore that often falls on one of your family members. We can assist your executor to efficiently manage an estate. Involving an experienced advisor can often assist to minimize the impact that this process might have on inter-family relationships.

When one passes, accounts are often frozen by the financial institution and you cannot dispose of real estate until a court approves your Will. Not surprisingly, the probate process involves fees. Most provinces impose a fee calculated based on the value of your assets and there will be legal fees. 

This all translates to a loss in the value of your estate and stress and inconvenience for your family. Probate can be minimized and often eliminated with proper estate planning.