By Dušan Maksimović, CBSA secretary general
Estate planning is all about safeguarding your loved ones. Among the key reasons for arranging estate planning are i) it protects beneficiaries ii) it spares heirs the burden of excessive taxation iii) it avoids family disagreements iv) it shields young children and v) it allows someone to make healthcare decisions on your behalf.
Uncertain times, such as the current corona virus pandemic, have given many of us food for thought and time to turn our attention to matters of a personal nature that usually go unattended in the fast-paced world of today. This is true of estate planning documents and plans that have not seen the light of day for years. The current situation has created personal unpredictability for many due to restricted movement and quarantine measures, lack of contact with extended family members, and financial hardship bearing in mind the uncertain future ahead for some businesses. Certain high-risk groups, (the elderly or other vulnerable persons, medical professionals etc.) may have greater impetus to update existing estate planning arrangements or to put estate planning arrangements in place to put their affairs and assets in order and keep them private, which is important to many people and especially owing to the unpredictability of the times ahead.
It is worth considering a review of estate planning documents (if they exist), particularly the extent to which those dependent on an individual may have become more financially vulnerable and in need of support.
Furthermore, life insurance placed in trust for dependent family members may bridge the gap if personal asset values have diminished during the past couple of months, and may potentially provide additional asset protection for family members, thus helping avoid the dissipation of wealth.
Proper and comprehensive documents are crucial to estate planning, in particular power of attorney for healthcare treatment and financial decision-making if a person becomes incapable of dealing with their affairs. Becoming incapacitated without having the proper legal arrangements (documents) in place may lead to a legal guardianship. However, these scenarios can be avoided through proper planning.
If we were to highlight one step to copper fasten any estate planning arrangement it would be to ensure that a last will and/or living will is in place. Having one in place helps to keep predicaments to a minimum for loved ones. A last will and/or living will may detail a person’s desires regarding property and future medical treatment (e.g. a person may want life-sustaining medical treatment and administration of hydration and nutrition).
Furthermore, as a key component of any estate plan, sight must not be lost of the fast moving world of tax legislation, including inheritance tax legislation, because failure to update an estate plan to reflect tax legislation amendments can lead to problematic situations for beneficiaries as well as increased administration costs.
Against that background, having an estate plan in place during these ambiguous times is crucial. It is vital to have clear instructions in place as to who is authorised to make medical and/or financial decisions on your behalf in the event you are unable to look after your own affairs for whatever reason.