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Divorce is an emotionally draining time for not only the couple but for their family as well. It can also be a financially devastating time. Putting your energy into your financial wellbeing is essential when going through this big life transition. You will be forced to make life changing decisions in a very short period, and it is important that you know what you are entitled to and where you stand in the marriage, from a financial perspective.

What You Need to Know

1. Find and Compile Your Financial Records – Your first move to protect yourself financially is to make a file of all your financial records. Tax returns, loan documents, retirement accounts, bank accounts, and investment statements. You want to be sure that you are aware of all accounts and liabilities when you go into the divorce process.
2. Assess Your Assets – Make an exhaustive list of all your assets that could come into question when it comes to division of property. Marital assets are any asset or liability that was acquired during the marriage. This includes houses, cottages, land, investments, pensions, personal property (jewelry, art etc.), vehicles, and other types of intangible property (such as intellectual properties). Debts can also be considered marital property depending on the nature of the liability. Typically, assets acquired before marriage remain in the possession of the person who brought them into the marriage. Inheritance and gifts can also be excluded from divorce if the assets have not been used to buy joint property.
3. Open New Bank Accounts – Many married couples have combined finances and use joint bank accounts for convenience’s sake. If you have or if you plan to end your marriage, one of your first steps should be to open new bank accounts in your name that your spouse does not have access to. You should also make it a priority to have any direct deposits updates with your new accounts (your pay cheque, for example) and start paying your bills out of your new individual account.
4. Change Your Will and Update Beneficiaries – Most couples name each other as beneficiaries in their will and on any investment or insurance accounts that beneficiaries are designated. This should be changed as soon as possible. This may not seem like a top priority, but the unexpected happens and no matter how amicable the divorce, it is impossible to know your wishes will be honors upon your death if you do not put it in writing. Investment accounts and life insurance policies can easily have their beneficiaries changed through your advisor. Your will and power of attorney designations needs to be updated by a lawyer.
5. Change your Mailing Address (if applicable) – If you are changing your address due to the divorce, or even if you are splitting time in the family home until the divorce is settled, you should change your mailing address immediately. Whether this is to your new home or if you secure a PO Box, it is important that your mail stay private as you may receive correspondence from your lawyer or information about your finances that your former spouse should not be privy too.
6. Get Credit Cards in Your Name – If you have joint credit card, pay them down and cancel them immediately so that you don’t find yourself responsible for debt that your spouse may accumulate when you leave the marriage.
7. Refrain from Making Any Big Financial Decisions – Divorce can be a long road. Assets may become unavailable to you as you go through court proceedings, or conversely you could end up having to hand over more to your spouse then planned, and it is wise to hold off any making any big purchases or making any irreversible decisions until the divorce is finalized.

The Bottom Line

Divorce is complicated and can be a difficult time, both emotionally and financially. It is always best to work with legal and financial professionals when navigating a divorce to ensure your best interests are being looked out for and that you are being treated fairly as the divorce proceeds.

Having a proper estate plan in place will ensure that your loved ones are protected if you were to pass away. As soon as you have any assets or property it is time to contact your team of professionals to discuss what would happen to those assets if you were not here anymore.  Neglecting to do so can end up costing your estate or loved ones in the form of probate costs and potential legal battles. Unfortunately, many people think that they can skip the estate planning process and that it doesn’t apply to them. Below are three of the most common misconceptions about estate planning.

What You Need to Know

1. Estate Planning is for Older People: While it is true that older people are more likely to be in need of a solid estate plan due to wealth accumulation and age, there is no right age to start the process. The reality is that it is not uncommon for people to die too early and it is a disservice to your family to not acknowledge this fact. A good rule of thumb is to put an estate plan in place as soon as you have someone who depends on you. Marriage and having children are two major life events that might come to mind.
2. Estate Planning is Only for the Wealthy: Estate planning is important no matter what the value of your assets are. In fact, the less that you have the more strain your family may feel when you are no longer around. Estate planning can include distributing your assets but it also involves leaving an income for your family in the form of insurance planning. Having a plan in place will give you the peace of mind that your family will be cared for financially.
3. A Will is All You Need: While a will is a good foundation, a good estate plan should include so much more. Wills, power of attorney, health care directives, insurance, business succession planning, tax planning, trusts… the list goes on! A will outlines where your assets will go, but it doesn’t necessarily specify how they are going to get there. Transferring assets smoothly takes extensive planning, but your heirs will thank you for it after you are gone.

The Bottom Line

The best time to start considering an estate plan is right now! You should be prepared for the unexpected no matter your age or the value of your assets. Talk to your advisor about different strategies you can use with your investments and insurance to ensure that your assets are as organized as possible and can pass smoothly to your family.

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While uncomfortable to think about, effectively planning ahead for when you are no longer here can save your loved ones a great deal of time, money, and emotional hardship.  Estate planning can be complicated, but there are some basic “must-do’s” that should be regularly updated and reviewed. Below is a simple checklist for making sure your estate plan is up to date.

What You Need to Know

Wills

• Have you created a will?
• Is it updated and current?
• Have you experienced any major life changes since the will was created? This could be a new marriage, divorce, child, death in the family, etc.

Wills should be created with the guidance of an estate lawyer to ensure that your final wishes are correctly documented and carried out. It is vital that a will be regularly updated as it acts as the foundation of your estate plan.

Beneficiaries

• Do all your registered investments have a named beneficiary? This includes RRSP, RDSP, RESP, TFSA, Pension Plans, and Segregated Funds.
• Do all your life insurance policies have a named beneficiary?
• Have you recently reviewed your beneficiaries? Has there been a major life changes such as a marriage or divorce that could warrant a change to your beneficiary appointment?

Beneficiary designations allow for assets to bypass probate (in most cases) and be passed directly to your beneficiary. This is a great money and time saver.

Dependents

• Do you have a family member that you wish to provide an income to after your death?
• Do you have family members that you wish to fund an education for after your death?
• Do you have any family members that have special psychological or physical needs that you would like to provide financial support for?
• Do you have a parent or other relative that you wish to ensure is taken care of financially if you die prematurely?

There are a variety of different financial and legal tools available to Canadians that can help them provide income or support for their dependents when they are gone. Keeping your dependents updated in your will is important as they may change throughout your lifetime.

Executors

• Have you named an Executor of your will?
• Is the Executor up to date? Have you named an alternate Executor in the event your first choice is unable to fulfill the position?
• Has your Executor been made aware of their appointment and been briefed on your final wishes?

An Executor is someone you appoint in your will that will be responsible for administering your estate. An Executor should be someone you trust and also someone who is capable of dealing with the potentially complex responsibilities involved with administering an estate.

Powers of Attorney

• Have you appointed a Power of Attorney for Property? This person will be able to help you with your finances and personal property in the event you are unable to do so yourself.
• Have you appointed a Power of Attorney for Personal Care (Health)?  This person will be responsible for making medical and personal care decisions for you if you become unable to act on your own.
• Are you POA’s aware of their appointment and willing/capable to perform the tasks that will be required of them?

Power of Attorney is a legal document that allows you to appoint someone to help you with your finances and personal care in the event that you feel unable to do so or become mentally incapable.

Financial Planning

• Have you spoken to your financial advisor about structuring your assets in the most tax efficient way to minimize estate taxes and probate fees?
• Have you set aside enough money to cover final expenses, estate taxes, probate fees, and funeral arrangements?
• If you own a business, have you worked with your professional team of advisors to develop a succession plan?
• Have you recently taken the time to calculate your final expenses and potential estate taxes?
• Have you addressed any permanent insurance needs you may have?
• Have you spoken to your advisor about your wishes to make a charitable donation before/after your death?

Your financial advisor will play a significant role in helping you prepare your estate. The above questions are only some of the issues that you may want to bring up to your financial advisor so that they can help you make your estate as efficient as possible.

Your Personal Financial Inventory

Prepare an Inventory of Assets and Liabilities

• Real Estate
• Investments
• Bank Accounts
• Annuities/Life Insurance
• Personal Property (Art, Jewelry etc.)
• Pensions
• Value of Any Businesses You Own and Their Structure
• Digital Assets

Make Sure You Indicate the Location of the Following

• Will and Power of Attorney
• Birth and Marriage Certificates
• Divorce/Separation Agreements
• Insurance Policies
• Deeds
• Safety Deposit Box
• Preplanned Funeral Arrangements
• Trust Documents
• Names and Contact of Personal Advisors (lawyers, accountants, financial planners)
• Executors, liquidators, and trustees

Far too often family members are left scrambling to find important documents and information. Your financial advisor and lawyer can help you collect the above information and organize it for your beneficiaries and executors.

The Bottom Line

Estate planning has a reputation for being complicated, but for most people all it takes is some thoughtful pre-planning. Working with a lawyer and financial professional will ensure all of your bases are covered and your final wishes are carried out. Estate plans should be reviewed and updated regularly.

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There will come a time when you may be incapacitated or leave your loved ones behind. When either of these happens, you do not want to leave your loved ones in limbo about what to do or what will happen to your assets and properties. Proper estate planning is a way of avoiding this. An Estate Plan takes care of your assets and properties when you can no longer do so. All financial and medical decisions are usually contained in an Estate Plan.

Who Should Inherit Your Wealth?

This is a decision you have to make sooner or later in your estate plan. That is why it is always available to update your estate plan every now and then, preferably every 3 to 5 years. The truth of the matter is when it comes to sharing your assets and properties amongst your loved ones, it is almost impossible to make everyone happy with what you bequeath them. The best you can do is make sure everyone you want, gets something, whether or not they are satisfied may be beyond what you can control. You can also make sure your immediate family gets more share than extended family members and friends in that order. You should also try as much as possible to ensure that your children get equal shares of your estate.

However, equal doesn’t always mean fair. A lot of family disputes over inheritance arise due to the fact the testator does not bequeath his or her assets and properties to the children in an equal manner. There will be strife and division amongst your children. It may even disrupt the probate process. Your children may decide to challenge your Will. No one wants animosity among their children when they’re gone. You can seek the advice of an estate lawyer to properly advise you on how to go about it and how to prepare for such happening in your estate plan. Most times it is advisable to sit your children down and explain why you have decided to share your estate unequally among them. Explaining your rationale may help prevent potential strife and animosity. However, if you know the child with the greater share may be bullied, then it is best to keep it to yourself.

How To Legally Donate Your Wealth to A Charity Without It Being Contested by Your Relatives

Donating your wealth to charity is a normal thing done by people. However, it is not without its issues, especially when family members feel entitled to your wealth more than the less privileged. The first step to avoiding this is engaging the services of a lawyer to make your estate inaccessible to your loved ones after your demise. It is your wish, so you have the right to make it, whether it is acceptable to your loved ones is another issue entirely. When your loved ones disagree with your bequest, it affects the probate process as they may decide to challenge it. Challenging your Will means they have to prove that you were not of sound mind when bequeathing your estate to charity. Therefore, you should ensure you follow all legal requirements of estate planning in your province and territory. It is advisable to go the way of using a Trustee to manage and disburse the funds to charity. Using a Trustee restricts the charity fund to existing on paper only. It will also be difficult for your loved ones to challenge because the charity funds are managed by a third party who is not a family member. You can also set up a foundation that will draw money from an alternative source in your estate plan. This also takes is beyond the reach of your loved ones.

How To Keep Family Members from Suing Your Estate and Getting Your Wealth by Way of Court Order.

The wishes in an Estate Plan are usually a subject of dispute among family members who got along fine before your death. This is sometimes not totally your fault. You can blame it on human nature. However, if your Estate Plan was not legally made, it can be contested by any family member which may lead to your wishes not being carried. To avoid this, you have to make your Estate Plan lawsuit-proof. Here are some tips on making that happen:

Go For a Trust Rather Than a Will

When you create a Trust, it does not go through the process of probate which usually involves the Courts. This limits the chances of it being contested by unsatisfied family members. The Trustee will be in charge of managing your Estate instead of an individual.

Go For a Corporate Executor

It is tempting using a family member as an executor, especially when you are sure there would not be any form of rancour regarding your assets. If you decide to go for a Will instead of a Trust, using a family member as your executor may give rise to hate against such a person or an abuse of power by such a person. A corporate executor will be a neutral executor and it is less likely to be an issue amongst family members.

Make Sure You Are of Sound Mind and There Is No Undue Influence

This is a legal requirement that makes your Will lawsuit-proof. If you make a bequeathal that does not go down well with a family member and it is established that you were not of sound mind when making the Will, it could render it void. You may wish to do both physical and mental evaluation before signing the Will. The same goes for undue influence. Ensure that you make your Will of your own free will.

Do Not Forget The “No Contest” Clause

The “in terrorem” clause as it is known is a perfectly legal clause that states that any family member who tries to contest the Will forfeits his or her inheritance. However, you should leave something reasonable for the people you know are likely to contest the Will for this clause to work.

Make Provisions for Disinheritance

If you are not bequeathing anything to a family member, it is advisable to state in your Will that you are not bequeathing any asset to such person. You can also leave a letter or memorandum detailing your rationale for the disinheritance. However, be careful of stating the reason for disinheriting the person, especially if the reason can be said to be against public policy. Each province and territory have their governing laws when it comes to disinheritance. However, note that you cannot disinherit your minor children and your spouse, except there is a binding Prenuptial Agreement.

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Building a home is not for the faint-hearted. A lot of sacrifices and planning are required, especially on the financial side. You do not want to bring your children into the world without proper financial plans. It is even advisable to start planning for kids long before they come. Before having children, you should try as much as possible to settle all debts, budget for child care and support, and apply for tax breaks and other benefits that may be available for children. A lot of questions pop up when trying to plan for your kids and with enough research, you can get adequate answers. We would try as much as possible to answer some of these questions for you.

How Much Insurance Should You Carry On Your Life Once You Have A Family?

When it comes to the type of insurance you should do once you have a family, experts advise that your coverage should be 7 to 10 times your annual income for adequate cover for your family. Surveys show that 74% of Canadians have a life insurance policy but 70% majority are worried that their life insurance is not adequate to take care of their family in the event of their death. Determining what will be considered as enough for life insurance is almost an impossible task because families differ but there is a general formula you can use. This formula is known as DIME – Debts, Income, Mortgage, and Education. DIME is the total sum of:

• All your current and future debts;
• The multiplication of the number of years your family will need your income with your current annual income;
• What you owe on your mortgage and any expense on renovation or expansion; and
• How much will cost to send your kids to school up until the level you wish.

What you want in your life insurance cover depends on what you want to leave behind for them. Life insurance is not for you but your family.

 Do You Need A Living Will?

A living Will, also known as Personal/Advance Directive is a document that contains your preference and wishes for your personal and medical needs for when you are unable to make such decisions. The document takes care of your end-of-life affairs whilst still alive. You need a living Will to take care of things for when you can’t make key decisions. It also spares your family from making difficult decisions in your absence. A living Will protects you and your family, just like insurance. Anything could happen at any time, it could be a ski accident, stroke, or bike crash that may incapacitate you, with a living Will in place, you are still in control of your life. A living Will must include who to make medical and financial decisions on your behalf, the level of their authority, your medical wishes, and the welfare of your family if you are incapacitated. Ensure you find out the laws that govern a living Will in your province.

How Early Do You Need To Begin Estate Planning To Ensure That Your Child Is Given Your Inheritance?

Estate planning is an important decision you need to make so as to adequately provide for your family. It is a detailed plan on how you want your assets to be distributed when you depart. It has its tax benefits, and it helps you structure and manages your finances both when you are alive and after you are gone. You can engage the services of a lawyer or use estate planning kits, apps, and websites with estate planning templates. If you choose the latter, it is advisable to give a lawyer to review for you. Estate planning involves documents like a Will, power of attorney, and a living Will. which is why you may need to consult, lawyers, tax experts, and financial planners when you want to come up with an estate plan.

There is no rule of thumb that states the exact time you should start your estate plan. Experts will say once you cross the threshold of being a minor, you can start your estate planning while some people choose to come up with an estate plan when they clock 40 or are diagnosed with a terminal disease. This means that you could start as early as when you clock 18 or when you are close to the great beyond of which you must still have the legal capacity to come up with an estate plan. it does not really matter when you begin your estate planning as long as you meet the legal requirements of making and your plans and wishes are clearly articulated. You should also make sure you update your estate plan every 3 to five years.

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