There are 3 Beneficiaries to Your Estate
If you have a will, you have a choice on what you would like to happen with your money once you are gone. We often think of the beneficiaries of our estate as loved ones. But a beneficiary can be any person or entity you choose to leave money or assets to. The top three are:
- Family
- Charities
- CRA
Who do you care most about??
Family
In Canada, after you pass away, the proceeds of your estate can take one of two routes:
1. Proceeds can pass seamlessly from you to your loved ones.
2. Proceeds can enter the probate system.
If no beneficiary is named, your assets will enter the probate system. The probate system can take a lot of time and cost a lot of money, depending on probate fees or estate administration tax in the province where you live and the value of assets distributed through your estate. That’s why it is so important to name a beneficiary for your assets.
Charity Donation Strategies
There are many options for donating to charities, the first being Beneficiary Designation with Registered Plans. One of the easiest ways for Canadians (other than Quebec residents) to donate is to designate your preferred charity the beneficiary of your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Tax Free Savings Account (TFSA). This strategy allows the funds to bypass probate and be paid directly to the charity named as the beneficiary of the account.
The most common is bequests. A bequest is a gift made in your will. When making a charitable bequest in your will it is important that you accurately identify the charity by including its proper legal name, address, and charity registration number.
CRA
Dying without a Will can create problems for those you leave behind. First, your property will be divided according to the law, which may not be the same as how you would have divided it. Second, there will be extra time delays and expenses involved in wrapping up your affairs, and the court will have to appoint someone to act as your personal representative. Worst case scenario is the government and CRA end up in control of your assets.
There’s never a better time to plan for death than when you’re alive. You’ve worked so hard for all you have, don’t let it go to waste. Talk to us today to plan for the hereafter.