How to Leave a Legacy

Simon Huften

Simon Huften is the President of Life Insurance Canada.com Inc.

Dictionary.com defines legacy as “anything handed down from the past, as from an ancestor or predecessor.” I don’t know about you personally, but for me, when it comes to the word legacy, it’s a word that carries some gravitas. We often think of famous humanitarians, artists, or scientists as people who leave a legacy behind. The word legacy often becomes associated with something that other people can see after you have left this earthly plane. You don’t have to be famous to leave a legacy, though. Have you ever considered what your legacy will be? How about what you want it to be? If you make sure that you have effective estate planning while you’re alive, you can ensure that you leave a legacy that reflects your values. Here are some tips on how to make it happen.

In this article: 

• Make Sure You Have a Valid Will
• Plan for Who Will Execute your Wishes
• The Tax Man Cometh!
• Make Sure Your Plan Stays Up To Date
• Ask The Professionals

Make Sure You Have a Valid Will

This is very important. Your will is how you explain what you want to happen after you’re gone to your loved ones. Oftentimes, people think things like they are too young to have a will or that they don’t have enough assets for it to be worthwhile. Neither of these is a good reason not to have a will in place. While there is no perfect age to set up a will for yourself, you need to remember that people pass away unexpectedly at any age and that even if you don’t have many assets that make up your estate, you deciding where things should go is a lot better than the Ontario courts deciding based on their intestate laws for the division of assets. You should also not think that the preparation of a will is impossible because it is too costly to make one. For example, there are low-cost digital options for simple wills that can help get anyone set up with a legal will. This also negates the whole “I don’t have a will because I didn’t know how to get one” argument. Websites like legalwills.ca, willful.co, and epilougewills.com are all viable options for Canadians where you can set up your will in a cost-effective way.

Plan for Who Will Execute your Wishes

This is really important. Picking the right executor for your estate will make it much easier to feel secure that your wishes will be carried out. Making sure you pick the right executor can make a world of difference in ensuring that your plans for your legacy are fulfilled. There are many options for choosing who will be your executor. You can choose a friend, a family member, or a professional such as your lawyer or accountant. There are pressures that come with being an executor, so make sure you choose someone who can handle things like:

• The emotional pressure: If you choose a family member or close friend, remember that along with carrying out your final instructions, they will also be dealing with the emotional aspect of coming to terms with your death. This can lead to a feeling of being overwhelmed.
• The time commitment: Depending on how complicated your estate is, it can take a long time to settle. Granted, taking the time to have things well planned and communicated in advance can make this easier, but you still need to make sure that the executor you choose is able to meet the time demands of this role.
• Dealing with your beneficiaries: Even if you’ve done the best job possible explaining what you want your legacy to be while you are alive, after you are gone there’s a chance that your beneficiaries will disagree with what you planned. Now that you are gone, it is up to your executor to handle objections to your wishes in a way that aligns with what you wanted to happen and not buckle under pressure to do things differently. Sometimes this requires skills such as conflict resolution.
• There’s no training for the role: This is a big consideration if you are choosing a friend or family member. People often don’t act as an executor regularly and may only do it once or twice in their life. This means that many things are learned on the fly in what can be complicated situations. Making sure that taxes are paid, debts are settled, and assets are distributed can be tricky, and unfortunately, as the executor, you can be held personally liable for mistakes.

The Tax Man Cometh!

Most of us have heard the old adage that the certainties in life are death and taxes. This expression is credited to Benjamin Franklin from a letter he wrote in 1789, so the certainties in life have remained unchanged for a couple of centuries now. As I have mentioned before, death is a certainty. I don’t even need to Google it (or AskJeeves, if you prefer) to find out that currently the mortality rate worldwide is 100%. Indeed, everyone dies, so we started this discussion with some suggestions for how you can take the time while you’re alive to make sure that your plans for your legacy are established and executed. But what about the other half of this expression? Yes, taxes are inevitable, but good planning can minimize their effect on your legacy. It is essential that you understand how things like probate fees work and how capital gains, registered savings plans, and non-registered investments will be taxed upon your death. You can also take some time to plan the most efficient way to pay tax bills and limit how tax payments grind down your plans for your legacy. As part of your estate planning process, you may want to explore options like:

• Setting up a life insurance policy that will allow the death benefit proceeds to offset the tax bill you expect.
• Use of trusts and other more complicated legal structures to control when assets are distributed.
• If your legacy plans include supporting your favourite charities, make sure that you take advantage of the donations that your estate can be credited for.

These are just a few ideas. Making sure that you talk to your financial advisor, accountants, and legal experts can really help you ensure that your estate is efficient and that more of your assets make it through to become your legacy rather than lining the pockets of the government.

Make Sure Your Plan Stays Up To Date

If you’ve taken the time to lay out how you want your legacy to look, made a will and an estate plan, and worked with financial advisors, accountants, and your lawyers, why would you not take the time to make sure that it stays up to date and continues to reflect your desires? You will inevitably experience changes in your life. You might get married, have children, get divorced, or find a passion you want to support later in life. All of these things require you to make changes to your estate plan to ensure that it reflects your current state in life. You need to make sure your beneficiaries are designated properly and that they are up to date because once you are gone, there is no way—short of something like this scene from the movie Ghost—for you to clarify things. For example, if you have a life insurance policy in force when you pass away, the insurance company will pay the death benefit to the last person you designated as your beneficiary. It doesn’t matter if you’ve had a change in your life. Imagine the look on the face of your wife when she finds out that the life insurance policy she was counting on is about to have the death benefit paid to a former spouse who you parted ways with decades ago. Keeping things up to date is a simple process, and if it can avoid a situation like that, you should be more than willing to take the small amount of time it takes to keep things updated as your life changes.

Ask The Professionals

This point always comes up again and again in the blogs we write. Taking the time to meet with professionals and use their expertise to help you build your plan is never a bad decision. I learned many years ago that it is simply too much for anyone to know everything about everything. The one exception to this rule seems to be 10-year-old boys. I know when I was 10, I was the world’s foremost expert on everything—just ask my parents. I am sure they remember when I was way smarter than them about everything. But aside from that, if you have a vision for what you want your legacy to look like, taking the time to speak to experts can ensure that you effectively and efficiently put together a plan to achieve your goal. If you don’t know where to start, I would suggest a call to the team at Life Insurance Canada.com as a great starting point. Let their expert advice guide you through the process of leaving your legacy in the world.