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Finding the Right Balance

Here are some estate planning considerations that can impact your retirement and what you can do to balance your priorities.

Have an Honest Talk with Your Family

Talk to your spouse or partner about what you both want out of retirement and your shared legacy. Do you both want to leave something to the kids? Donate to a charity? Also talk about whether you want to give these gifts now while you’re still alive or after one or both of you have passed away.

This will get you both on the same page before you share your plans and desires with the rest of the family.

See Important Conversations to Have with Loved Ones

Balance Your Desire to Help the Kids with Your Income Needs

Want to give your grandkids educational opportunities or help your son or daughter buy a home? Before you gift money while you are still alive, make sure you also have enough money set aside to last your full retirement.

Keep in mind that:

  • Retirement may last 30 years or more
  • You don’t always have control over your retirement date
  • You may not have enough time to make up lost contributions

Decide the Best Time to Give Away Assets

If you do plan to leave money or other assets to family members, think about how much control you want to have over those assets while you are still alive. (The family cottage, for example.) Also think about whether you want to have the experience of watching your beneficiaries enjoy these gifts.

Taxes are another consideration—your timing and how you transfer an asset can affect the taxes you and/or your beneficiaries pay.

Be Tax-Smart if You Donate to Charity

If you’re planning to leave something to your favourite charity, there are several ways to transfer your assets, either before or after you pass away. Some options can help you save on your taxes during retirement and also provide a long-term benefit to the charity.

Put Together an Estate Plan, if You Don’t Already Have One

An estate plan helps you to pass on your assets to your loved ones or to the causes you support in the fastest and most tax-efficient way. Without these important protections in place:

  • The courts will appoint someone to manage and distribute your estate—and they may not choose the person you would want.
  • There could be significant delays distributing your assets to your loved ones.
  • Extra legal fees may be required to settle your estate.
  • You’ll miss the opportunity to set up tax-efficient ways to pass your assets to your beneficiaries.

For everyone’s sake, be sure to set up an estate plan. While estate planning can be complex, here’s a quick overview of a few key things you should do:

A Will is the cornerstone of your estate plan, stating who will be responsible for carrying out your wishes, and how you want your assets to be distributed. It’s important that this document be clear and up-to-date.

An executor (liquidator in Quebec) is a person or trust company that administers and distributes your assets after your death. You can ask anyone you trust (a friend or family member, for example) to be your executor; however, you should be aware that it is a large burden to place on someone and that they are not obligated to take on the role.

Your executor will have many responsibilities, including making funeral arrangements, determining the value of your estate assets and liabilities, probating your Will if necessary, preparing and filing tax returns, paying your debts and ultimately distributing your assets.

Because there are so many tasks, make sure your executor fully understands the duties or consider hiring a trust company such as RBC Estate and Trust Services.

It seems intuitive to think that if you were to become mentally or physically incapacitated because of an illness or accident, your spouse or partner could simply make decisions for you. But this is not the case. Without a court order or Power of Attorney, your family members could not manage your finances or health care.

To help protect your interests and desires, it’s important to have a Power of Attorney (mandate in Quebec).

A Power of Attorney is a legal document that lets you give another person (or people) the authority to act on your behalf. The Power of Attorney can be used to make key decisions about your finances, property and even your personal care.

For more information, see What is Estate Planning and Why Does It Matter?

Protect Yourself with Living Benefits Insurance

Your idea of retirement may include travel, new hobbies and many other relaxing activities. You’re probably not thinking about spending your savings on secondary health care coverage, a private care facility, or home renovations to deal with an illness or injury.

To help preserve your retirement savings, consider living benefits insurance.

Living benefits insurance provides you with money if you develop a serious disease such as life-threatening cancer or have to pay additional living costs because of a medical condition. There are three main types of living benefits: critical illness insurance, long-term care insurance and disability insurance. For details on these valuable coverages, talk to your insurance advisor.

Make Your Final Arrangements

Having to plan and/or pay for a family member’s funeral can be difficult for those who are left behind. To help protect the legacy you want to leave, consider making arrangements for your funeral and final expenses ahead of time and remove this burden from your family.

Want to know more? An RBC Financial Planner can help you strike the right balance between your estate and retirement plan.

What to Check Out Next

What is Estate Planning and Why Does It Matter?

Planning for Health Changes in Retirement

How Will I Fill My Time in Retirement?

Let’s Start the Conversation

RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
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