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Estate planning starts with the five Ds

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I am working on a children’s book to teach children about investing, taxes, budgeting and estate planning.

My stories include princes and princesses, dragons, and the usual medieval background. The last sentence reads, “Then the dragon ate the prince, but his family trusted him and the princess lived happily ever after.”

Well, the ending wasn’t so happy for the prince, but the moral of the story is a good one nonetheless. The importance of proper estate planning for your family’s long-term health and well-being cannot be underestimated.

Today I would like to share a framework for creating a plan called the 5 “D’s” of real estate planning. Define, design, document, discuss and distribute. The Five D Approach is adapted from author Sandra Foster’s method. real estate planning workbook What was published many years ago. Let’s focus on the first two D’s today.

1. Define

Start by defining what is most important to you. These are your core values. And if you’re looking for a great resource to help you figure this out, few do it better than Dave Phillips, a seasoned mentor to many successful business leaders across North America.he offers some free tools website. In particular, check out “The Values ​​Game” he offers there.

Your core values, not those of your children or others, should guide your real estate planning decisions. For example, if you find generosity to be a core value for you, you may decide to include charitable contributions in your will. And if faith is another core value, perhaps your philanthropic efforts will be donated to faith-based organizations.

Likewise, if family and adventure are important to you, your estate plan should aim to bring positive change to your family and perhaps incorporate an element of adventure. For example, I know a couple who decided to take part of the money they intended to leave to their children to take the whole family (children and grandchildren) on a safari in Africa to build connections and memories. rice field.

Once you define your core values, define who in life receives your assets. You also need to define how much money they will receive and when they will receive it (during their lifetime or when they die).

There are a few questions to ask yourself here. Do you want to enjoy money while you are alive? Do you feel a desire or obligation to help your heirs? If your spouse survives, do you want them to inherit everything? Should children benefit equally from your estate? Are there certain assets that certain children should receive? Worried about leaving too many heirs? Want to give a gift to a charity? Do you have debts that must be paid off before your heirs receive anything? If you own a business, have you considered making the right transition of ownership and management? mosquito?

2. Design

The second step in the process is to design the strategies, tactics and tools you will use to transfer your property to your heirs. This should start by defining your goals. Your goals should align with your core values ​​from Step 1.

Everyone’s goals are different, but common goals include: 1) Minimize taxes on death or transfer. 2) enable the surviving spouse to maintain a standard of living; 3) Provide proper care of your property after you leave. 4) Watch your children enjoy a piece of your inheritance today. 5) ensure the care of minor children; 6) Make sure children from your first marriage receive a proper share of your property. 7) Maintaining family harmony after you are gone.

Sometimes conflicting goals need to be prioritized. For example, wanting to see your children enjoy a share of your inheritance today and helping your spouse maintain a standard of living after you are gone can be conflicting goals. I have.

Tools that help achieve various ends include trusts for minors to hold assets until they reach a certain age. Protect your home, vacation home, or private company equity interest with a principal residence or lifetime capital gains exemption. A spousal trust that provides for a spouse while ensuring that their assets are passed on to their children after their death. Life insurance is meant to provide cash for charity work, fund the payment of taxes, or replenish an inheritance to ensure that everyone is treated equally.

It’s important to consult a trusted tax and real estate expert here.

Next time is also a continuation of the conversation between the five Ds.

Tim Cestnick (FCPA, FCA, CPA(IL), CFP, TEP) is an author, co-founder and CEO of Our Family Office Inc. Contact information is as follows: tim@ourfamilyoffice.ca.

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