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Rising house values mean estate planning is key to avoiding family drama, expert says

In February 2022, the benchmark price of all residential properties in Metro Vancouver soared 20.7 per cent year-over-year to $1,313,400, according to the Real Estate Board of Greater Vancouver.

Detached properties in Vancouver were also up to a benchmark of $2,044,800 (up 25 per cent year-over-year), while apartments climbed to $807,900 (a 15.9 per cent year-over-year increase).

The board’s report cited an overall lack of inventory as the main reason for the jarring increase in value. For those looking to hold onto their properties, however, the jump means some families are finding themselves with surprisingly valuable assets.

That makes now an ideal time to discuss your goals with an estate-planning expert, says Sheryne Mecklai, CPA and partner at Manning Elliott in Vancouver.

“It’s unrealized value,” she says. “You don’t really benefit from the value until you sell it.”

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In partnership with Manning Elliott, we find out why it may be time to start looking at estate planning and how a professional can help.

Ensure your wishes are met

Mecklai recommends that anyone 40 or older who has had 15 or 20 years of experience in their career begin looking at estate planning as they enter the growth stage of their financial portfolios. She says that in light of those skyrocketing real estate values, an individual may be worth more than they realize.

“The stock market has a big play in that too,” she says. “If you’ve got an RSP or RRIF, that’s probably also grown in value.”

Failing to consider and plan where you want those assets to go when you pass, Mecklai says, could mean your wishes won’t be met, as decisions then go to the courts, where income tax consequences change and there isn’t as much freedom in terms of deciding what beneficiaries will receive.

It can also put undue stress on family members as they try to pick up the pieces.

“We’ve had situations where someone passes away with a lot of value and didn’t do any planning,” Mecklai says. “It leads to a huge mess. I’m talking millions of dollars and didn’t do anything. You don’t plan to die, but it’s just a mess. It’s a nightmare for who’s left behind.”

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One reason Mecklai believes people put off estate planning is the perceived finality of it: no one wants to think about their death. But she recommends that most people revisit their estate plans every five years and notes it’s never too late to change your mind about your wishes.

“Look at the assets you own and see if there’s any changes and things you need to do,” she says. “Life changes. Your assets change. And so you have to constantly look at your plan.”

READ MORE: Digital assets need to be considered, included in your will: expert

Working with a professional

While some may prefer to do their estate planning on their own or with only a lawyer, working with a business advisor can further protect you and ensure your final wishes are met. That’s particularly true for small- and medium-sized business owners or anyone with shares in a company.

“If you don’t plan it properly, you’ll end up paying tax on the same value twice,” Mecklai cautions. “In some cases, you can cost your estate almost 75 per cent of the value. It can get expensive.”

Individuals without businesses or stocks can also benefit from a personalized plan, however, as Mecklai points out every estate is unique and therefore requires an individual approach. An experienced planner will do that, she says, in addition to bringing knowledge of the constantly changing rules and regulations, which should always be considered when planning an estate.

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“You need to go to a professional that has a good understanding of these rules,” she adds. “If you’re not giving everything to your heirs equally, or you have non-resident children, that’s going to complicate things. Those are the situations when you need a professional, because it’s not cookie-cutter.”

READ MORE: The importance of having a will

For more information on estate planning or to book a consultation, visit Manning Elliott.

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