Updated: Jun 28, 2021
The focus of Untangle Money's blog is to highlight different aspects of our relationship with our finances, so we brought on our friends at EstateBox to help give our readers a primer on estate planning.
More and more women are becoming the financial decision-makers in their households. In fact, 72% of millennial women are the primary decision-makers for financial planning in their households compared to less than half of baby boomer women.
As women, we also tend to view wealth differently than men. Most notably, when asked how we define wealth, 38% of women include “preparedness for the future” as part of our definition, compared to only 30% of men.
An estate plan is a fundamental part of being prepared for the future.
No one wants to think about estate planning. Do you really want to think about what happens to your assets when you die? You may think you don’t even have any assets, if you're saving up for your first home, or you're just learning about the stock market.
And it’s easy to put it off indefinitely because estate planning is for grandparents, or people with a mansion, a summer house, and two Bentleys in the driveway, right?
We’re here to break it to you — estate planning is for everyone, regardless of how much money you have today or plan to have tomorrow. And it’s especially important for women, as we’re making most of the financial decisions for ourselves and our families.
What is estate planning?
Estate planning starts with preparing the legal documents needed to protect and care for the people you care about when you die. It doesn’t end there, as estate planning is more about the careful consideration you put into those legal documents when preparing them.
“We think of estate planning as a mindful practice of preparing your estate in a way that continues the meaningful legacy you’ve spent your entire life building.”
Why does estate planning matter?
The more you plan in advance, the more peace of mind you’ll have for yourself and those you love, both now and later. Imagine you were given a week to live. Would you rather spend it with the people you love— or frantically making big decisions about your assets and getting legal documents in order?
Dying without a will and an estate plan (as both Jimi Hendrix and Kurt Cobain did) can create a legal nightmare for those you love. Thorough and thoughtful planning lightens the load for whoever manages your estate and ensures the people you love are taken care of after you’re gone.
How do I start estate planning?
There are a few key legal documents that should be included in your estate plan. You’ve probably heard of a will and power of attorney, but you may be less familiar with an advance healthcare directive or letter of instruction.
Let’s take a look at what you’ll need (and we’ll share some pro tips along the way).
Writing your will:
A will is a legally binding declaration of how you want your assets and property distributed after you die.
Everyone needs a will. It doesn’t matter if you’re 25 or 85, or if you have $5.00 or $50,000 in your savings account.
This is also where you name your executor(s), specify who you’d like to be your children's’ guardians, how your pets should be taken care of, and any gifts you’d like to leave.
Some lawyers will store the original, but you can also register your will with the Canada Will Registry.
Selecting an executor:
When selecting your executor (the person who will be in charge of managing your estate), think of the people in your life you can count on to get stuff done. Ideally, you want the most organized, objective, and dependable person you know. If no one comes to mind, you can also appoint a lawyer or financial professional.
Whoever you decide on, it’s important to ask them if they would like to be your executor. It’s also a good idea to appoint more than one executor as a backup.
Power of attorney:
A power of attorney is a document you sign which gives someone the authority to manage your money or property on your behalf while you are alive (unlike an executor, who is responsible for managing your estate after you die). Whoever you’ve appointed becomes your “attorney”, even if they’re not a lawyer.
Having an attorney can be helpful if you’re ever unable to pay bills or take care of other important matters, due to illness or hospitalization, mobility issues, or even just being away for work or travel.
Pro tip: Your “attorney” cannot make a will for you, change a will you’ve already created, change a beneficiary on a life insurance plan, or appoint a new power of attorney on your behalf.
Health care proxy and advance healthcare directive:
A health care proxy is the person who makes medical decisions on your behalf if you’re unable to communicate. They ensure that you receive the care you want if you are unable to communicate with your medical team.
Your proxy will typically be named in your advance healthcare directive or living will, which states your end-of-life wishes, and how you would like to be cared for.
When preparing your advance healthcare directive, consider the following:
What medical treatments would you want or not want?
How would you want your pain managed?
Would you want treatment even if a cure wasn’t possible?
Do you want your organs or tissue donated?
Making these decisions in advance takes the pressure off of your family or friends to make difficult decisions about your health during an already stressful time for them.
Letter of instruction:
A letter of instruction can include step-by-step instructions and information about less legally binding matters, including:
Names and contact info for anyone who should be invited to your funeral
Any funeral plans you’ve made
The charity you want people to donate to in lieu of flowers
Usernames and passwords your executor might need to access your accounts
Names and contact info of lawyers, accountants, and financial advisors
Any final messages you want to leave for your loved ones
While more valuable assets need to be distributed through a will, a letter of instruction can include instructions about how to distribute items that have sentimental value.
For example, a painting that’s worth thousands of dollars would need to go through a will, but a painting you created (unless you’re Banksy) could likely be passed down to your grandchild.
Pro tip: Some of these documents may have different names depending on which province or territory you are in.
Feeling overwhelmed? Don’t worry—we’ve got you covered.
Let’s talk about professional help next (no, not that kind of professional help).
Who can help me with this stuff?
Aside from selecting an executor who you trust to carry out your wishes after you’re gone, there are two main professionals who can help you create your estate plan:
Financial planner or advisor
A lawyer will help you create most of the documents we talked about earlier, including your will, power of attorney, and health care proxy.
While the letter of instruction isn’t legally binding, your lawyer will likely have suggestions about what to include.
Depending on your province or territory you may not need a lawyer to create an advance healthcare directive, unless your situation is complex.
A financial planner or advisor can help you make informed estate planning decisions based on your unique situation.
Pro tip: As women, we’re rarely taught to advocate for ourselves. That’s why it’s important that you choose to work with professionals who:
You feel comfortable enough to share all of your hopes, dreams and goals with
Listen to your concerns or questions and provides real answers (“don’t worry, I’ll take care of it” is not an answer)
They should not be someone who:
Is condescending or makes you feel foolish for asking a question
Provides a one-size-fits-all service for all the women they serve
Remember — it’s your finances, your life, and your estate plan. Every decision you make, even when guided by a professional, should feel right for you and your unique situation.
Where should I keep my documents?
Having a thorough and thoughtfully prepared estate plan doesn’t help your loved ones if they can’t find what they need when you pass. That’s why it’s so important to ensure that your executor knows exactly where to find all the key documents they require to fulfil your wishes.
But where should you store your documents? A shoebox under your bed—or even its sophisticated cousin, the filing cabinet—may seem like the answer, but we have to break it to you… There are better solutions.
An estate planning platform like EstateBox ensures your executor and your loved ones have access to everything they need to manage your estate. With EstateBox, you simply scan your documents and upload them to a single, secure digital environment, granting access to only those individuals who require it.
And if you’re just getting started with estate planning, a platform like EstateBox is also designed to guide you through the process of uploading the right documents in the right place.
Pro tip: A safety deposit box may seem like an ideal place to store your will and other important documents… except that the proof your executor needs to show they’re your executor is inside the safety deposit box.
What should I do next?
You’ve created an estate plan and let the appropriate people know their roles. You’ve worked with professionals to create the key documents outlining your wishes. You’ve stored your important documents in a safe place that will be easy for the key people in your life to find. You’re done… right?
Estate planning is life planning—and life doesn’t stop just because you’ve written your will. If the last year has taught us anything, it’s that life is unpredictable.
Here are just a few life changes that may necessitate a change to your estate plan:
The death of an executor, or a change in your relationship with your executor
Moving to another province, territory, or country
Adopting a child
Remember to touch base with your executor(s) every few years to see if they’re still in a position to fill that role. If your executor moves to another continent, they won’t be able to manage your estate very well.
Estate planning may seem overwhelming and even bewildering at first. Luckily, like all seemingly complex financial concepts, all it takes is a bit of untangling and some expert advice to make the path clear.
We recommend that you break your estate planning journey down into steps, and take it one step at a time. Make a list of the documents you need to prepare, the individuals you would feel comfortable appointing to key roles, and the professionals you need to contact.
And for a stress-free, digital estate planning experience with guided walkthroughs tailored to your unique needs, visit the EstateBox website to learn more about our life and legacy planning platform.