Wills and Estates
WHY IS AN ESTATE PLAN NECESSARY?
It is amazing to me that some people living in Canada do not have a will. Some statistics say that more than 50% of the population over the age of 18 do not have wills. What is amazing about this is that it means more than half the population has not taken the time to come up with an estate plan.
I think that what needs to change is our perception of just what an “estate plan” is. Many people focus on the word “estate”, and think that you don’t need an “estate plan” unless and until you have an “estate”.
There are two things wrong with this thinking. First, we all have “estates”. Your estate is simply your life and the stuff that belongs to it. If you are over 18 and own a shirt, you have an estate. Secondly, most people focus on the wrong word. The important word in the phrase “Estate Planning” is “Planning”.
“Planning” refers to the process of addressing your mind to what is going to happen in the future. The idea is to take steps to exert a level of control over that future. When you sit down to do an estate plan, you are simply devising a path for yourself and your assets to follow. Too many people associate “estate planning” with death. This might explain why so many people put it off. But estate planning is much more. It has to do with life: your life and the lives of the people who survive you.
Having a will is only one part of having an estate plan. It is the most important document in an estate plan, but it is not the most important step. The most important step is recognizing the need to make a plan: for you, while you are alive, and for your loved ones, when you are incapacitated or die.
The fact is, we humans are a resilient bunch, and we have developed the ability to ignore uncomfortable realities. Hence, frank discussions about death seldom happen, and no one expects incapacity resulting from illness or accident. People often start their will instructions to me by saying, “If I die…”, as though there is some alternative. The fact is, it is a question of “when”, not “if”.
A proper estate plan looks at your life and tries to establish a program, starting now, that will enable you to maximize your enjoyment of it, while minimizing the adverse impact of a diminishment in its quality over time. A will only deals with what will happen on death. A proper estate plan deals with your whole life. It asks questions like: what will happen to your assets if you are alive but unable to take care of them anymore? What if you have an accident or health problems and cannot continue to care for yourself? How do you maximize the size of your estate and minimize the taxes and other costs that could deplete it?
A proper estate plan reflects your current situation, both personally and financially. It is always subject to review. Your will simply reflects your present perception of an anticipated future. But your estate, like your life, is not static. It is constantly subject to change: marriages begin, marriages end, children are born, parents die, jobs are lost and businesses are started. Life is interesting because it is unpredictable, and every shift in the status quo means that your future has changed. Which is why you need an ongoing estate plan.