Wills, Estates and Your Financial Plan
With contributions by Anwar Hussein, C.A.,
M.B.A., Investment Advisor, BMO Nesbitt Burns, Toronto
Providing for your Estate is only one of the important steps involved in achieving your financial goals and aspirations.
At WISE LAW, our clients regularly ask us about financial planning issues. We strongly recommend that expert advice from investment and accounting professionals be obtained with respect to financial planning issues.
We have asked Toronto investment adviser Anwar Hussein, C.A., M.B.A., of BMO Nesbitt Burns to offers his comments on the financial planning process, and are grateful for his thoughts and expertise regarding the following frequently asked questions::
What types of financial plans should I have?
The types of financial plans that people should have will depend on their specific situation. However, the following two plans usually apply to most individuals:
(a) Retirement Plan:
- Whether you are working towards retirement or already retired, you should have a retirement plan that outlines how your investments will fund your entire retirement period.
- While no one can predict the future, retirement planning can make it clearer. By integrating the many elements that affect retirement income, you will be able to review your options and make informed decisions.
(b) Estate Plan:
- Estate planning ensures that upon your death, your assets are distributed according to your wishes.
- Regardless of your age, the size of your estate or the complexity of your situation, you need to be able to answer some basic questions with certainty. For example, does your plan ensure:
- Your spouse or dependents will be financially secure?
- Your family will maintain their standard of living?
- Income taxes and other costs will be minimized and funded?
- Your estate will be distributed as you intend?
- Your assets and investments will be maintained if you become physically or mentally incapacitated?
Why should you have a personal financial plan?
- A documented plan is essential to meeting your personal long-term goals.
- The financial plan will provide you with a specific strategy to achieve these goals (e.g. your plan may indicate that you need to invest $500 per month to retire at age 55). Once you have detailed your specific objectives in the short-term, it increases the likelihood of achieving your goals in the long-term.
- An individual is no different than a corporation when it comes to the need for a financial plan. However, a corporation always starts every new year with an updated financial plan to meet their goals. Most individuals rarely do.
What is involved in preparing a financial plan?
- Your investment advisor should prepare a financial plan for you after you have discussed your personal objectives
- The ongoing steps involved are as follows
- Outline your personal goals
- Create a plan to meet the goals
- Invest assets according to plan and your risk tolerance
- Review performance of investments at set intervals
- Review and adjust plan as needed
When do I need to update my financial plan?
Financial plans are long-term in nature so they do not need to be adjusted frequently. The appropriate time to revisit your plan is when a life-event occurs. Examples are as follows:
- Starting a new career
- Making changes in your family situation (e.g. marriage, children, divorce,…)
- Adjustments to your personal goals (e.g. you decide to retire early)
Anwar Husain is a Chartered Accountant and an MBA who has lectured in the past with the Canadian Securities Institute. He presently works as an Investment Advisor with BMO Nesbitt Burns. He can be reached at (416) 928-1798 email@example.com