Nobody really likes to think about their estate, however it is essential to be proactive and your executors will thank you for it. Being well organized will help your executors to settle your estate properly and efficiently – hopefully without any surprises. You probably know the basics of estate planning but here are a couple of tips about aspects of estate planning that you may not have thought of.
Net Worth Statement
I recommend that everyone should prepare a formal or informal net worth statement once a year that includes their assets, debts, and potential tax requirements. Preparing this statement annually and, just as importantly, providing it to your executor or a key service provider creates a fantastic starting place. It saves time and takes out a lot of the guesswork potentially required in settling estates. Having an executor who knows where your current finances stand allows them to proceed with dividing up the estate as per your wishes, paying outstanding debt and satisfying the demands of the Canada Revenue Agency in a timely and hopefully hassle free manner.
Along with your net worth statement, you should always provide your executor with names, addresses and contact numbers of any service providers (ie. investment brokers, lawyers, accountants or tax advisors) that you deal with.
Hard Copy vs. Soft Copy
All estates require a significant amount of documentation. In an increasingly paperless environment, it is crucial that your executor can access the required documents. There are many benefits to having a computer filing system that contains all of your electronic files in soft copy. Soft copy files can be a great way to maintain historical documents, keep data all in one place and maintain backup copies. Whether your filing system is hardcopy or soft copy or a mixture of both, it is important that your executor is aware of your system. Passwords to your computer, email accounts and online banking should be written down and along with keys to safe deposit boxes kept in a safe place for your executor to retrieve when needed.
There are some documents that are required to be kept in their original physical form and cannot be scanned versions. These include birth certificates, citizenship papers, passports, marriage certificates and property title or deed documents. You should provide the location of these documents to your executors along with the location or a copy of your original will. Needless to say, your executor carries great responsibility and it is crucial to choose that person wisely.
It always sounds like a daunting task but maintaining an organized estate now will not only make your day to day life easier, but it will also give you peace of mind to know that you have given your executors all of the tools to settle your estate. If you have any questions about estate planning or you need assistance in preparing a net worth statement, don’t hesitate to contact me at [email protected].
Peter Berry, CPA, CA, TEP