Settling an estate can be a daunting task, both emotionally and financially. When you pass away, your Executor and loved ones may face several challenges that can add to their grief and stress.
Emotional Burdens
Your family might have to deal with disagreements, impulsive decisions, invasion of privacy, and delays. The process of settling an estate can take anywhere from 12 to 18 months or longer, which can prolong the emotional strain.
Financial Burdens
In addition to the emotional toll, there are significant financial burdens, including probate fees, executor fees, accounting fees, legal fees, and dealing with creditors.
The Solution: Proactive Estate Planning – A Path to Peace of Mind
By taking a proactive approach to estate planning, you can alleviate many of these burdens. There are two effective strategies that will reduce the cost of settling your estate and ensure your assets flow smoothly to your loved ones. The first is investing in segregated funds and the second includes selecting legacy settlement options to suit your situation.
Investing in Segregated Funds
Segregated funds are investment portfolios offered by Insurance companies. They offer several advantages for estate planning:
- Beneficiaries: You can designate beneficiaries to receive a death benefit from your investments. This is particularly efficient for non-registered accounts which generally cannot have named beneficiaries otherwise.
- Probate Bypass: The death benefit bypasses your estate and goes directly to the beneficiaries, ensuring a smooth and quick transfer of assets. This also allows the assets to bypass the probate process and associated probate fees. This can significantly reduce the time needed to settle the estate and provide significant financial savings.
- Privacy: The assets in your Segregated fund contract do not look to your will for distribution instructions and therefore are not subject to public disclosure.
- Guarantees: Protect the value of your initial investment on the contract maturity date and on death. The guarantees range from 75% to 100% of your initial investment, reduced for any withdrawals.
- Potential Creditor Protection: Creditors may not be able to take the funds you have in your segregated fund contract.
- Rapid Settlement: Assets invested in Segregated funds are generally paid out to the designated beneficiaries within 2-4 weeks of receiving settling documents. This ensures your loved ones have cashflow to deal with any estate or personal expenses.
- Tax Savings: Assets distributed to a beneficiary through a Segregated contract are not taxable to the beneficiary. This makes using segregated contracts an ideal way to pay your Executor a tax-free fee for their services.
The Legacy Settlement Option
The legacy settlement option allows you to choose how the death benefit will be paid to your beneficiaries. You can opt for a lump-sum payment, a payout annuity, or a combination of both. This flexibility is particularly beneficial in situations such as:
- Blended families with stepchildren
- Heirs with poor spending habits
- Dependents with varying degrees of capability
- Minors and financially dependent heirs
- When wealth skips a generation
This option ensures that your assets are distributed exactly as you wish, providing an inexpensive, swift, and private distribution of assets.
Conclusion
By proactively planning your estate and utilizing options like the legacy settlement and segregated funds, you can significantly reduce the emotional and financial burdens on your loved ones. Contact us today to discuss how insurance-based investment products might be advantageous for your estate planning needs. We aim to ensure a seamless transition of assets and provide you with peace of mind.