Getting personal Canada: Advisers Review Clients’ Estate Plans
via Dow Jones Newswire | June 21, 2011
As financial planners comb through their clients’ accounts for a mid-year review, many advisers are making a mental note to check changes in clients’ affairs that could affect their estate plans.
“Sometimes clients aren’t aware of the small changes that can make a big impact,” said Nicholas Miazek, a certified financial planner at T.E. Wealth in Calgary, Alberta.
Estate plans are typically reviewed every three to five years and for those that are up for a review this year, several questions need to be addressed. Is the staggered distribution of the will appropriate? Is the person in charge of executing the will still appropriate as executor? Has the client moved to another province that could warrant drafting a new will? Are there changes in family dynamics that could affect distribution among beneficiaries?
Miazek said many clients overlook changes that financial planners should be aware of.
For instance, the distribution of the will could originally secure a staggered allowance for the youngest child up to the age of 25–but the youngest child is now past that age so the will needs to be redrawn.
Changes in family dynamics are important, especially if grandchildren, who aren’t originally part of the estate, are born.
Miazek said people who want to give a share of their estate to their grandchildren should amend their will if it was originally intended just for their children.
“[Financial planners] need to ask questions because sometimes clients don’t realize the fact that their children having children is relevant to their estate plan,” said Miazek. “If the will doesn’t address that, [the grandchildren] could be disinherited.”
To stay abreast of the client’s estate plan, Miazek prepares an estate summary, which is a one- or two-page document that lists the major points of a client’s will. He also creates a distribution flow chart and estate valuation to maintain an overview of the estate’s size.
Tax issues should be considered when reviewing a will, since there could be tax strategies that might work when the client is alive, but not when he or she is dead, added Peter Merrick, a certified financial planner and president of MerrickWealth.com.
For instance, it might make sense to pay taxes now while the person is still alive. Or a client may wish to execute an estate freeze in order to transfer assets to his or her beneficiaries without tax consequences, Merrick said.
“Ask what the person wants to achieve and look at the tax consequences,” he said.
However, people’s goals change. “That’s why you have to review an estate plan every few years,” said Merrick.
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