11.4.1 Benefits of estate planning

If you've been successful in managing your money throughout your life, you'll likely want to decide what happens to it when your life comes to its end. You need to plan your estate.

Estate planning means arranging how you will leave your money and property when you die and what you intend to leave for your spouse, children or other family members. It involves a variety of topics, including:

• writing your will and naming someone to be responsible for carrying out your wishes
• deciding who will look after your children if you die while they are minors
• distributing assets during your lifetime
• arranging your assets so that you will pay only the minimum taxes necessary
• arranging insurance to cover costs, provide for your survivors and pass on assets
• arranging who will handle your affairs if you become unable to manage them yourself, and giving them directions.

Definitions

• Estate: The money and property you leave behind when you die
• Estate planning: Arranging how you will leave your money and property and take care of your spouse, children or others after you die
• Estate planner: Someone who helps you plan how you will leave your money and property and take care of your spouse, children or other family members when you die. Estate planning takes a special knowledge of law and taxes.
• Will: A legal document that sets out what you want to happen to your money, property and other assets after your death. A will can also set out plans to take care of your children or other family members who count on you financially.
• Executor: Someone you name to carry out the wishes that you set out in your will
• Beneficiary: A person or institution you give money to in your will, under an insurance policy or trust
• Death benefit: Money that your life insurance or other plan pays to your estate or beneficiary after your death
• Power of attorney: A legal arrangement where you give someone the power to make property and health care decisions for you if you are not able to make your own (also called a representation agreement or in Quebec a mandate in case of incapacity)
• Living will: A legal arrangement that sets out the medical care that you do or do not want in case you are ever unable to state your wishes
• Probate: The legal process of settling the estate of someone who has died