Is estate planning only for the wealthy?

Estate planning should be an integral part of everybody's financial plan. Your will is actually the last step in the process.

Before you can create an effective will you need to consider what is important to you so that you can be certain that your wishes will be carried out when you're gone.

Many people haven't seriously considered making charitable contributions through their estates because of concerns about depriving their heirs or the mistaken belief that this is an option only for the wealthy. In fact, people of modest means can actually create a legacy by planning ahead even if they have little or no estate when they pass away.

The reality is that we all eventually donate a substantial portion of our assets when we die anyway. By not planning our gifts, we automatically include the government as an heir.

Although Canada does not have estate taxes (other than probate taxes in Ontario of 1.5% on most estates), income taxes on capital gains and RRSPs or RRIFs can send as much as a third of your assets to Ottawa.

You have a choice. By making bequests to charity in your will, your estate can obtain substantial tax credits that can reduce or even eliminate taxes otherwise owing at death.

Anything directed to a registered charity through a segregated fund, annuity or life insurance policy can bypass your will, reducing probate costs while still creating a tax credit that can reduce taxes on other assets.

A skilled advisor specializing in estate planning, working with an experienced lawyer, can help you expand your giving opportunities using a variety of tools ranging from trusts to annuities and life insurance.

Not only does planned giving benefit your community, but it can even preserve your estate for your heirs as well. In effect, you have the power to redirect taxes to a charity of your choice instead of letting Ottawa decide the best use of your money.

One final tip: planned giving isn't just about estate planning. You can give now as well as when you pass away. There are many ways that you can plan current gifts that cost you little more than the taxes you'll save. More importantly, you can make a difference today and know you're eventually leaving the world a little better than you found it.

As Mahatma Gandhi said, "Be the change that you want to see in the world!"