You need an estate plan, but do you need a lawyer to do it properly?

Estate planning can seem daunting, especially if you think it requires hiring a lawyer. In his latest column for CTVNews.ca, personal finance contributor Christopher LIew covers practical tips to simplify the process (shapecharge / Getty Images)

Estate planning can seem daunting, especially if you think it requires hiring a lawyer. After all, good lawyers don’t come cheap, and it’s hard to trust a cheap lawyer.

Thankfully, you can start your estate planning without a lawyer. In fact, the more you can prepare before meeting with a lawyer to finalize the details, the smoother the entire process will go, as you’ve already taken the initiative and completed most of the hard work yourself.

From listing out your assets to creating a will, I’ll cover some practical tips and tools to simplify the process. Whether you’re just starting or looking to refine your plan, these steps will help you take control of your future and provide peace of mind for you and your family.

What does estate planning entail?

If you’re just getting started, the Financial Consumer Agency of Canada has an excellent estate planning checklist to help you stay organized. In short, estate planning involves:

How involved your estate planning becomes will largely depend on the size of your family, the amount of wealth you manage, and the number of assets you have.

Even if you plan to donate everything you own to charity when you pass away, you’ll still need to do some estate planning to ensure your wishes are honoured.

Fun fact: a number of prominent billionaires have signed The Giving Pledge, and are planning to donate large portions of their wealth to charity after they pass away.

How to start your estate planning on your own

Now that you have a better idea of what to expect, here are a few simple steps that you can start taking today in order to get ahead of planning your estate.

Step 1: Take inventory of your assets

The first step in estate planning is to take inventory of your assets. This includes listing all physical assets such as property, vehicles, bank accounts, and investments.

Equally important is accounting for digital assets like cryptocurrency, websites, and monetized social media profiles.

Keeping a detailed and updated record of all assets sees that nothing gets overlooked and simplifies the distribution process for inheritance and beneficiaries.

Properly keeping an inventory of your assets provides a clear picture of your estate and also makes sure that all valuable items are accounted for and distributed according to your wishes.

Step 2: Determine your liabilities

Understanding your liabilities is another critical (and often overlooked) step in estate planning.

Liabilities include any debts or obligations you owe, such as mortgages, car loans, credit card balances, and personal loans.

It’s important to know exactly how much you owe, and to whom, as many of these debts will need to be repaid before your other money and assets are passed down to your heirs.

Managing and, if possible, reducing your debt can ensure that your heirs are not burdened with unexpected financial obligations, making the estate settlement process smoother and more efficient.

Step 3: Designate your beneficiaries

Your beneficiaries are the named recipients of your wealth, assets, and insurance benefits. Some beneficiaries may receive full assets, while others may receive partial ownership or benefits.

For example, you may name several children as the joint owners of your property.

Clearly naming beneficiaries helps avoid legal complications and potential disputes among heirs. Regularly review and update your beneficiary designations, especially after major life events like marriage, divorce, or the birth of a child.

Step 4: Create a will

A will is a legal document that outlines how your assets should be distributed after your death. It allows you to specify your wishes clearly, appoint an executor to manage your estate, and designate guardians for any minor children.

Without a will, your assets may be distributed according to provincial laws, which may not align with your preferences.

Thankfully, you can create a will without a lawyer using DIY will kits or online templates from services like Willful or LegalWills.ca.

See that your will is comprehensive, regularly updated, and legally valid to provide peace of mind and clarity for your loved ones.

Step 5: Establish power of attorney

Establishing a power of attorney (POA) is an essential part of estate planning, allowing you to designate someone to make decisions on your behalf if you become incapacitated.

There are two main types of POA:

Setting up a POA helps to make sure that your wishes are respected and important matters are handled by someone you trust. You can establish a POA without a lawyer by using government-provided forms or reputable online services.

Clearly outline the powers granted and keep the document updated to reflect any changes in your situation or preferences, providing security and continuity in times of need.

Step 6: Organize important documents

Throughout this process, make sure that you’re keeping all of your documents organized and filed away, where they’re easy to find in the event of unexpected injuries, illness, or death.

I also advise making digital copies of all of these important documents and storing them safely on the cloud, where they can be accessed anywhere if the original documents are lost, stolen, or damaged.

Regularly review your estate plan

Lastly, it’s a good idea to frequently review your estate plan.

As life progresses, your assets, debts, and relationships will change, and your estate should reflect that. For example, you wouldn’t want a newborn child to get skipped in the inheritance line or your home to be passed to an ex-spouse.

When to seek professional advice

While I encourage everybody to start planning their estate with these simple steps, there will be a point where it’s a good idea to get a lawyer who specializes in estate planning involved. This is especially true if you have a complex estate, such as many assets or a small business.

Your lawyer will be able to go over the specifics of your estate and make sure that the right terminology is used to best reflect your wishes. During this process, you may also get certain documents notarized so that they become official.

Planning for your retirement is also another important step that often goes hand-in-hand with estate planning.

Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.

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