In her new book, Own Your Life, 7 Essential Steps to Independence, author, speaker and lawyer Suzanne B. Quinn guides the reader through the seven essential steps to personal and financial security and independence. This article is an excerpt from her book, comprising one of the seven steps.
Now we get to the subject that no one likes to talk about. So my compromise is that I’ll keep it short, and leave more information available on my website, for those who want or need more information.
Just because you might be a stay at home mom, and do not “earn an income” per se, does not mean that you have no value. On the contrary. Appropriate planning and insurance for you is every bit as important as it is for the breadwinner.
So here, I’ll go over the basics, and you can discuss the rest with your financial advisor and your lawyer. Check my website, where you can find more resources.
We’ve already talked about the need to plan for your family’s future. There are a few components to an estate plan: drafting your will, your powers of attorney, life and disability insurance, designating beneficiaries and joint tenancies.
Joint Tenancies
If you own any property with anyone else, for example your spouse, if you own it as joint tenants it means that you each own 100% of the property, and if either of you passes away, the other automatically takes ownership to that property. This is true of real property and other financial accounts, like bank accounts or other investments. This keeps the property out of your estate and it does not pass through your will. The only caveat to this, is that if you put one of your kids (or anyone other than a spouse) on a bank account as a joint account holder, you should back it up with a trust agreement that provides that you wish for them to have the money. Recent case law in Ontario has shown that sometimes people put their kids on the account for the purpose of doing their banking, not intending for them to inherit the money. A trust agreement would clarify this issue and avoid litigation.
Life Insurance
Life insurance policies require designated beneficiaries. If you designate someone as your beneficiary, they can collect insurance money immediately upon your death, without having to wait for probate, and it does not form part of your estate. This is a good way to provide for your family, some extra protection and extra funds that will be needed once you pass away. This is something you can discuss with your insurance provider or your financial advisor.
Pensions
Pensions also require a designated beneficiary. This also means that if you have a pension, that whoever you designate as a beneficiary will be entitled either to a lump sum or a survivor’s pension after you pass. This too, stays out of your estate and will be payable immediately upon your passing.
Last Will and Testament
The final step is drafting your will. Depending on the size of your estate, you may want to work with a financial advisor and/or tax planner and a lawyer in drafting the appropriate documents. You can devise trusts and plan your estate in such a way as to minimize the tax payable by your estate after you pass away. No matter what, having a properly drafted will is invaluable. By having a will, you decide who will be appointed to distribute and administer your estate, you choose you will be the trustee for your children’s money if they are still minors when you pass away, you also choose who gets what. If you do not have a will, government legislation dictates who gets what, and who is entitled to administer your estate.
So, who should decide what happens to your money and property – you or the government? That’s the key. The decision should be yours, so keep it that way by doing the right thing and do some estate planning. This is particularly important for those who have a common law spouse. In some jurisdictions, common law spouses have no property rights under intestacy. This means if you are living together for 20 years, but have no will, your common law spouse could end up with nothing. It is also important if you wish to bequest something to someone who is not immediate family, or if you wish to disinherit some undeserving beneficiary that might otherwise benefit from your estate, if you didn’t have a will.
Powers of Attorney
Powers of attorney are important because you are appointing someone you trust to take charge of your finances and/or personal and medical care in the event you are alive and cannot speak for yourself. They make the decisions for you. Very simple, yet essential.
If you become incapacitated, and you are on title to real property, it can not be sold or borrowed against until you pass away. Even if you’re joint tenants, your spouse (or the other joint tenant) will not be allowed to sell the house without your signature. If you have lost capacity due to a mental issue, you will not likely regain it. You could remain incapacitated for years, thereby preventing the sale of the property. You would be putting your family in a real bind without a power of attorney for property.
Power of attorney for personal care allows someone to make medical and care decisions on your behalf. Relieve your family of this burden of decision making. Appoint someone to do it for you. Tell them what you want, or put it in writing. It’s that simple. Do it now, while you still can. That way, there’s no fighting, there’s no agonizing decision making while you’re lying in a hospital bed.
Now, having said all that, it’s time to plan for your life, not your demise. Make your plans, and get on with life.
Suzanne is originally from Toronto and completed her undergraduate degree at the University of Toronto and went on to law school at the State University of New York at Buffalo, where she earned a juris doctor degree, and was admitted to the New York Bar shortly thereafter. Suzanne completed the requirements to obtain her licence to practice law in Ontario. Suzanne opened her own practice upon being called to the Bar in Ontario several years ago.
The focus of her law practice has been wills and estate planning, real estate, small business corporate, touching also on related issues of family law, administrative law and litigation. Her experience as a lawyer has provided unique insights into a diverse collection of life situations and circumstances of extreme hardship. Suzanne has counseled clients and businesses alike, in a variety of capacities, often outside of the legal realm. These experiences and insights have led her to pen her observations and advice into a guide from which readers worldwide can benefit.
Suzanne has spent a good deal of time throughout her career speaking to diverse groups of varying size on a number of topics. Through speaking engagements, Suzanne teaches others to take back control of their lives, finances, careers and time.
Suzanne currently lives and works in Woodbridge, Ontario. She is married, with three beautiful young children. Her family continues to motivate and inspire her every day.