Beneficiaries are important to protect your estate. For those individuals who have married and started a family, naming beneficiaries of their life insurance policies or RRSP’s may be more likely to occur. For a single man or woman with no spouse or children, it may seem a less important thing to do.
If you don’t specify anything on your beneficiary designation and something happens, the government will end up with most of your assets. There are so many better ways to allocate funds that you’ve worked your life to accumulate.
One option is to name “Estate” as your benefactor. What this means is that any funeral costs, final taxes, and probate fees can be used by your executor to finalize everything. The disadvantage of this is that the money will be added to your overall estate value, which increases the probate fees you will pay.
If you aren’t married or have children of your own, other possibilities for beneficiaries include parents, siblings or even close friends can be named as beneficiary to your estate. This provides a tax-free lump sum payment to whoever you have specified, which can be used to for the aforementioned fees. Also, naming a beneficiary gives them the option of transferring your benefit into an annuity for monthly income. Again, this is tax free.
If you truly feel that you have no one in your life to name as a beneficiary, another great thing you can do is name a charity as your beneficiary, and anything you’ve saved and built through your life can go into helping others. It’s a very generous way of using your estate to help many in need.
The best advice for anyone is to talk to a trusted financial advisor about the best course of action for your particular estate and situation. Call one of our offices to book a consultation today!