Take Five for the Unexpected and the Inevitable​

Published in May 2020

Dave Brubeck's classic tune "Take Five" starts with some great advice:
​
"Won't you stop and take
A little time out with me
Just take five"

Take Five live in Belgium 1964
Paul Desmond (alto sax), Joe Morello (drums), Eugene Wright (bass) and Dave Brubeck (piano)

​If you have assets or dependents, no matter your age or career background, "take five" to prepare your own estate plan and ensure that the people you care about are looked after in the case of an unexpected event or once the inevitable occurs.

Your Estate Plan should have three sections: The legal documents, a liquidity plan and a summary sheet. ​

Three Legal Documents: 
​Your Will, Power of Attorney and Representation Agreement.

​Form Your Will and Keep it Current
Having a Will is very important. If you die without a Will, then the Wills, Estate & Succession Act (WESA) of British Columbia decides who gets your assets upon death. That may not align with your intentions especially when there are descendants (children). When you have a Will locked away in the attic or posted in your online files somewhere, it is good practice to review and update that document every five years or so. Life events like the birth of a child, a separation or divorce, or the death of a parent may trigger a review, and a new Will is required when you get married. 

Think carefully about the family members, friends or professionals that you ask to name as your executors. They should have the skills required to execute the estate decisions on your behalf, and be willing to take on this obligation in the future. Assigning the services of an estate trustee to be the executor of your Will, directly or as an alternative assignment, can ease the challenges and effort required to execute the estate plan, especially if it is  complex or if an executor is also a beneficiary.


Complete a Power of Attorney for Property
A power of attorney (POA) gives someone else the legal ability to deal with your financial affairs in the event of your incapacity. Like many other documents in this discussion, the goal is to have a POA prepared while you are healthy and before you need it. 


Create a Representation Agreement for your Health Care 
A Representation Agreement for health care authorizes a designated person to make your personal health and medical decisions on your behalf in case of your incapacity. It is equally important to prepare this document prior to any illness. 

An Emergency Fund & Estate Liquidity Plan
​Life changes when someone passes on. An Estate can take months or years to be resolved while the estate will have expenses and perhaps taxes due.

To provide stability to the loved ones who are dependent on you, you estate planning should include arrangements for an emergency fund that will be available to your family so they can handle their expenses for a 2-5 year period after your passing. A great source of emergency funding for your family can be a personally-owned Legato Plan. When you pass away, that policy payout should occur within weeks directly to the named beneficiaries, not to your Estate, once the insurance carrier is informed of your passing.

Investments and business ownership(s) that have increased in value will mean your estate owes taxes on their capital gains. If you've coordinated liquidity in your estate through investments or life insurance otherwise, the estate will have the cash to pay those taxes. If not, your assets will need to be sold even if they are valued or highly treasured by the survivors. Make sure to plan for spousal rollovers when you make these assessments. 

​The payout of a corporately-owned, life-insured investment plan into that company can help save family investments, real estate and other hard-earned assets. The payout of the policy automatically generates a special allowance in Canada (CDA credit) that allows a major portion of that windfall to become tax-free dividends to the shareholders, meaning life-insured investments look very attractive for business owners making estate plan or succession plans as well as legacy gifting. ​

Work with each of your professional advisors to ensure that your estate plan reads clearly, meets your goals and includes every opportunity to minimize taxes. 

A Summary Sheet Of Your Key Information
By creating a summary list of all your assets, liabilities, bank accounts, credit cards, life insurance policies and professional advisors involved with your financial and legal affairs, you can help save significant time, effort and money for the executors of your will and your loved ones, so just do it. 

Listing both the life insurance company and policy number(s) will greatly assist with communication to the Carrier when the time comes, causing a timely payout to the beneficiaries.  ​If you are documenting actual bank and credit card account numbers or passwords, please do so in a safe and secure manner. 

Go over the summary with your spouse/partner, trusted family members, and your designated executors to ensure their understanding of your plans and intentions. Issues and concerns can be discussed and hopefully resolved, too. 

The world around us has suddenly changed with COVID-19. Let the reality of your mortality, global uncertainty, market volatility, increased taxation, and job insecurity motivate you to find the time now to follow some or all of these recommendations. Sometime in the future, you and your family members will be very happy you made the effort.

Legato can provide you with recommendations of professionals working in the areas of estate law, financial planning and tax accounting who compliment our work in the practice of life insurance. 

​By planning well, you'll help create your own smooth legacy transition. 

Comment: No, I cannot play my alto saxophone nearly as well as Paul Desmond, but thanks for asking. :-) 

​Don Anderson
@ Legato
Protect your wealth and pay fewer taxes.

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