Estate planning essentials for education members at every age

There’s an idea out there that estate planning is something you get around to in your 50s or 60s.

That’s like saying eating healthy or exercising regularly is something that’s only needed when you’re older—which obviously couldn’t be further from the truth.

In fact, there are many reasons why estate planning is something that should be done sooner rather than later.

After all, life is unpredictable. Illness and accidents can happen to anyone, at any age. So it makes good sense to ensure your affairs are in order by completing estate-planning essentials, regardless of what age or stage you are in life.

Your 20s: when you’re lower on the pay grid, building up pension credits, and paying off student loans.

While you may not accumulate much in the way of assets during this decade—an estate plan still protects your interests in other ways.

Educators Certified Financial Planner professional Darryl Martella puts those interests into perspective.

“An estate plan is so much more than distributing your assets,” says Darryl. “It’s also about how major (life or death) decisions would be made in the event something happened to you. As a young adult, you probably don’t like to think much about something as serious as your mortality. However, laying the groundwork for your estate plan early in life will provide you and your loved ones with peace of mind if something were to happen to you. It’ll also prepare you for the more complex estate planning that will come down the road.”

During your 20s, your estate planning essentials should involve:

• Gathering a team of professional consultants (i.e. attorney, accountant, financial advisor) whose advice you trust—because ideally, you’d be consulting with these people for the long haul
• Establishing who will have your Enduring or Continuing Power of Attorney (i.e. who will act for you if you become mentally incapable of managing your financial property)
• Determining who will be your Power of Attorney for Personal Care—this will be the person who will make decisions about your medical treatment if you are unable to do so (after you turn 18, your parents are no longer automatically able to do this)
  
• Understanding your retirement income sources such as your valuable pension (i.e. OTPP or OMERS), your Registered Retirement Savings Plan (RRSP), and other sources of retirement savings—and how they should all complement each other

Your 30s: when you’re moving up the pay grid, buying a home, and starting a family.

This is often the beginning of the ‘accumulation years’ and the time when, even if you feel like you haven’t accumulated a large amount of assets, you still need to start planning your estate.

During your 30s, your estate planning essentials should involve talking to a professional about:

• Creating a will (this becomes crucial as you begin to accumulate more wealth/start having children)
• Choosing an executor for your will—you will need to choose not only someone you trust but who also has the ability to be an executor (such as the know-how, time, residency, etc), so it’s important to learn what’s involved before choosing
• Choosing who will assume legal guardianship for your children—this may be more difficult than it sounds as many factors need to be considered and will be one of the most important decisions you’ll make
• Determining who you would want to manage trusts established for the benefit of any minor or disabled children (a trust is a legal device that states your assets are transferred into the ownership of a designated trustee—who will then manage those assets)
• Reviewing beneficiary designations on your financial accounts and ensuring they complement those in your will
• Purchasing life insurance for you and your spouse (which tends to be more affordable when purchased earlier in life, when you’re in good health)—consider also looking into purchasing disability insurance, which can protect loved ones if you were to become disabled and no longer capable of providing for your family
• Updating any healthcare or financial powers of attorney (if necessary)

Your 40s and 50s: when you’re typically earning a higher income, but also tend to have higher expenses.

This is the time of your life when you’re feeling quite comfortable with your job in the education field. You’re now in—or approaching—your peak earning years, which is a good thing. However, along with more money tends to come more financial responsibilities and obligations (perhaps you’ve purchased a bigger home, a cottage, or are saving for your children’s post-secondary education).

It’s also at this stage when you’re close to reaching your 85- or 90-factor—which means thinking ahead to retirement.

In addition to ensuring you’ve completed estate-planning essentials from previous decades, during your 40s and 50s you should be completing the following items:

• Applying for long-term care insurance—since premium rates are usually lower and approval rates higher for those under 60 (as you age, the likelihood of getting rejected for this type of insurance increases)
• Allocating funds to help pay health-related costs for aging parents
• Ensuring the bequests you leave your heirs are as tax-efficient as possible

Your 60s: when you can actually benefit from all of your previous estate planning preparation.

At this stage you’re most likely retired—and retiring earlier than the average Canadian definitely has its benefits. Yet among all of the relaxing and travelling and doing all of the other things education members like to do in their life ‘after school’, don’t forget to finish off the last of your estate planning essentials.

These final estate-planning details include, but are not limited to:

• Clearly communicating to your loved ones about how you want them to deal with your assets—this allows you to update/refine your estate plan should certain details be unclear or circumstances change (i.e. should one of your loved ones pass away before you do)
• Putting together a list of your trusted advisors assembled in the early stages of your estate planning process (i.e. attorney, financial planner, tax professional, etc.); then review this list with your family in case you become ill (your children/family members will then know who to contact when they need guidance handling your affairs)
• Including provisions in your will for trusts for grandchildren and forgiving debts from family members

Because your priorities will change throughout your life, you should also remember to schedule an estate plan review every 3 to 5 years—or whenever any of the following takes place:

• You get married, separated, or divorced
• You have or adopt a child / when that child reaches age of majority
• You, a child, or a parent becomes seriously ill or disabled
• You acquire or dispose of significant assets
• One of your beneficiaries passes away
• Your tax position changes

When it comes to estate planning essentials for you and your family members, we’re here to help.

Since 1975, Educators Financial Group has been helping education members and their families plan for every age and stage in life. Regardless of where you happen to be on that spectrum, we can provide you with the essential building blocks to developing your own solid estate plan.

Contact us and we’ll get back to you with educator-specific advice.

And be sure to check out our range of estate planning articles including:

ESTATE PLANNING: It’s not what you know, it’s whom you know
ESTATE PLANNING: Powers of Attorney, Guardians and Trustees
ESTATE PLANNING: Don’t forget the most important document… your “In case of emergency” file