So you’ve set up your estate plan. That’s great! But that doesn’t mean your job is done. It’s important to regularly review your documents and keep them up to date. Forgetting to do so could create challenges down the road. Anthony Okolie speaks with Treva Newton, Tax and Estate Planner, TD Wealth, about occasions when you should be updating your estate plan.
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* Creating an estate plan can make the process of distributing your assets easier while also minimizing tax liabilities should something happen to you. But it's not necessarily a one-and-done thing. Your plan should be reviewed and revised from time to time to reflect important life changes.
* Treva Newton, Tax and Estate Planner with TD Wealth, joins me now with more on this. Treva, welcome.
* Thank you for having me.
* Now, I want to get into some of the key moments in life when you should consider updating your estate plan. But before we get into that, what can go wrong if your estate plan isn't up to date?
* There's lots of things that can go wrong. It is really important to make sure you have your estate plan up to date. One of the things that I've run across is we had a client who got divorced and didn't update the beneficiary on his tax-free savings account. What happened when he passed away is those funds ended up going to his ex-wife instead of his current wife, and everybody was fairly shocked that it went to her. And there's really nothing that could be done about it.
* Now, clearly, some serious implications there. Let's go through some of the key moments in life when you might want to consider updating your estate plan. We'll start with marriage as one example. Why is this life event important?
* So when you get married, you probably want to provide for your new spouse, make sure that they're going to be looked after if something happens to you. You need to be aware that in some provinces, marriage actually revokes the will. So you want to make sure that your will has not been revoked because you got married. Take a look at what your provincial legislation says for that, and make sure that you have the correct beneficiaries named.
* OK, the other life event, of course, divorce. Talk to us about that one.
* So when you get divorced, you probably want to make sure that you're not leaving money to your ex-spouse. You probably want to maybe leave it to your children, charities, or other beneficiaries. Maybe there's a new partner. Divorce doesn't always revoke a will. Sometimes, what it does is treats your current spouse as if they've been predeceased. Make sure that if you have the divorce that you update everything so that things are accurately reflected.
* And what about when you have children or grandchildren?
* Mm-hmm. So if you did a will before you had children, it probably didn't take into account having children. So you want to make sure once you have children that you have the appropriate clauses in there and that you're leaving the assets to your children. Same sort of thing for grandchildren. When you have grandchildren come along, maybe you want to leave a specific bequest to them or maybe just making sure that if they were to inherit, that there would be appropriate trusts for them.
* OK, now, another life event is when you receive an inheritance. Talk to us a little bit about that one.
* Yeah, so some people when you get a large inheritance or a large sum of money that you weren't expecting, you know, it changes the way you're going to distribute your estate. Maybe you want to leave more to charities. Maybe you want to leave more to other beneficiaries. So that's a really good time that you need to make sure that you have things up to date.
* Good. I think this next one is important. When there's a major change in assets-- say you buy or start a business-- talk to us about that one.
* Yeah, so when you have a business and it's part of your assets, it's probably a major part of your asset and something that you want to make sure is looked after. So you need to make sure that you have appropriate clauses in your will so that your executor will be able to look after your business for you. Whether it's going to be to sell the business, keep the business going, borrow for it, you might have to have specific clauses in your will to deal with that.
* Now, outside of significant life events, how often should your estate plan be reviewed?
* I like clients to review the will every three to five years. It's really hard to plan outside of a five-year time period, so every three to five years, take a look and see if your wills and other documents still reflect your wishes. They may not require updating, but if they do, make sure you get updated. Maybe something like your children were minors when you did your will, but now they're not. Maybe trusts are no longer required for them. Make sure that you have everything up to date.
* Great information, as always. Thank you very much, Treva.
* Thank you for having me.
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* Creating an estate plan can make the process of distributing your assets easier while also minimizing tax liabilities should something happen to you. But it's not necessarily a one-and-done thing. Your plan should be reviewed and revised from time to time to reflect important life changes.
* Treva Newton, Tax and Estate Planner with TD Wealth, joins me now with more on this. Treva, welcome.
* Thank you for having me.
* Now, I want to get into some of the key moments in life when you should consider updating your estate plan. But before we get into that, what can go wrong if your estate plan isn't up to date?
* There's lots of things that can go wrong. It is really important to make sure you have your estate plan up to date. One of the things that I've run across is we had a client who got divorced and didn't update the beneficiary on his tax-free savings account. What happened when he passed away is those funds ended up going to his ex-wife instead of his current wife, and everybody was fairly shocked that it went to her. And there's really nothing that could be done about it.
* Now, clearly, some serious implications there. Let's go through some of the key moments in life when you might want to consider updating your estate plan. We'll start with marriage as one example. Why is this life event important?
* So when you get married, you probably want to provide for your new spouse, make sure that they're going to be looked after if something happens to you. You need to be aware that in some provinces, marriage actually revokes the will. So you want to make sure that your will has not been revoked because you got married. Take a look at what your provincial legislation says for that, and make sure that you have the correct beneficiaries named.
* OK, the other life event, of course, divorce. Talk to us about that one.
* So when you get divorced, you probably want to make sure that you're not leaving money to your ex-spouse. You probably want to maybe leave it to your children, charities, or other beneficiaries. Maybe there's a new partner. Divorce doesn't always revoke a will. Sometimes, what it does is treats your current spouse as if they've been predeceased. Make sure that if you have the divorce that you update everything so that things are accurately reflected.
* And what about when you have children or grandchildren?
* Mm-hmm. So if you did a will before you had children, it probably didn't take into account having children. So you want to make sure once you have children that you have the appropriate clauses in there and that you're leaving the assets to your children. Same sort of thing for grandchildren. When you have grandchildren come along, maybe you want to leave a specific bequest to them or maybe just making sure that if they were to inherit, that there would be appropriate trusts for them.
* OK, now, another life event is when you receive an inheritance. Talk to us a little bit about that one.
* Yeah, so some people when you get a large inheritance or a large sum of money that you weren't expecting, you know, it changes the way you're going to distribute your estate. Maybe you want to leave more to charities. Maybe you want to leave more to other beneficiaries. So that's a really good time that you need to make sure that you have things up to date.
* Good. I think this next one is important. When there's a major change in assets-- say you buy or start a business-- talk to us about that one.
* Yeah, so when you have a business and it's part of your assets, it's probably a major part of your asset and something that you want to make sure is looked after. So you need to make sure that you have appropriate clauses in your will so that your executor will be able to look after your business for you. Whether it's going to be to sell the business, keep the business going, borrow for it, you might have to have specific clauses in your will to deal with that.
* Now, outside of significant life events, how often should your estate plan be reviewed?
* I like clients to review the will every three to five years. It's really hard to plan outside of a five-year time period, so every three to five years, take a look and see if your wills and other documents still reflect your wishes. They may not require updating, but if they do, make sure you get updated. Maybe something like your children were minors when you did your will, but now they're not. Maybe trusts are no longer required for them. Make sure that you have everything up to date.
* Great information, as always. Thank you very much, Treva.
* Thank you for having me.
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