10 Things to Do Now that Will Protect Your Family in the Future
Thinking about the future can be a difficult thing, but it’s important to consider what you can do now to protect your family when you’re gone.
To help you prepare your family for the future, here’s a checklist of 10 things you can consider and prepare today to ensure your family’s security, well-being, and peace of mind.
1. Create a Will
A will is the cornerstone of any estate plan. It provides a clear picture of your wishes and how you’d like your possessions to be allocated. Having a will in place helps to avoid disagreements among family members and friends and gives you a way to ensure that your wishes are respected when you are unable to voice them yourself.
We recommend you work with a lawyer to prepare your legal will with their guidance and expertise. However, in several provinces, including Alberta and the Northwest Territories, a holographic will is considered legal and does not require any lawyer or notary to be involved. Your will must be written in your own hand and must be signed and dated. No witnesses are required. Learn more here.
However you choose to prepare your will, it’s a good idea to regularly update it, specifically after major life changes like a marriage, divorce, or birth of a child.
2. Establish a Living Trust
A living trust can help avoid probate, ensuring a smoother transfer of assets to your beneficiaries. You can transfer assets – including bank accounts, real estate, and investments – into the trust.
You should regularly manage and adjust the trust to include new assets and reflect changes in circumstances.
3. Set Up Power of Attorney
Having a power of attorney ensures that someone you trust can make decisions on your behalf if you become incapacitated. You can designate different people to be your financial power of attorney and medical power of attorney, or select the same person for both.
4. Purchase Life Insurance
Life insurance provides financial support to your loved ones in the event of your passing. It can cover funeral expenses, pay off debts, including tax obligations, and provide a financial cushion.
Calculate how much coverage is necessary based on your family’s needs and existing debts and select between term life insurance and whole life insurance based on your long-term goals and budget. We can introduce you to the right people who can help you with your insurance planning.
5. Plan for Inheritance
Inheritance planning ensures your assets are distributed according to your wishes, potentially minimizing taxes and legal complications. There are different tax implications that you should consider depending on how you approach your inheritance planning. You may be able to make use of gifts to transfer wealth during your lifetime, reducing the taxable estate. It’s a good idea to work with an accountant or financial advisor to determine the best course of action for you.
6. Save for Education
Setting aside funds for your children’s and grandchildren’s education can relieve future financial burdens and provide them with opportunities for growth. You can consider setting up automatic contribution to education savings accounts in their names.
7. Build an Emergency Fund
An emergency fund can cover unexpected expenses, such as medical bills or home repairs, without derailing your long-term financial plans. If you can, it’s a good idea to save three to six months’ worth of living expenses and to store these funds in a high-yield savings account for easy access.
8. Invest for the Future
Investing is a powerful tool for building wealth over the long term, and there are many options to choose from depending on your goals. You should consider diversifying your investments by spreading them across different asset classes to minimize risk. If you can, plan to make regular contributions to retirement and investment accounts. There are some great investment advisors available and we can make an introduction for you.
9. Review and Update Your Plans Regularly
Life can change often and quickly. Regularly review and update all aspects of your estate and financial plans to ensure they remain aligned with your current circumstances and goals. You can consider setting an annual reminder to review your plans, or to meet with your financial and legal advisors to ensure you have the best plans in place to protect your wishes and your family.
10. Communicate Your Plans
It might feel uncomfortable to discuss estate planning with your family, but it’s important that key individuals are aware of your plans and know where to find important documents. This will help prevent potential misunderstandings in the future.
Be sure to keep important documents in a secure location that is known to whoever you want to be able to access them.
Estate Planning Support for You
Preparing your family for the future is an ongoing process that requires careful planning and regular updates. You can build a solid plan that offers you and your loved one’s financial stability and peace of mind by addressing each item on this checklist.
We work with our clients to help you prepare a plan that’s right for your family. If you aren’t already a KWB client, schedule an introductory meeting with us to learn more.