There are some people who need help in managing their financial affairs. In these cases, a financial planner may be sought out. But how does financial planning differ from estate planning in Ontario? They sound the same, but in this case one thing is not like the other.
Primarily, financial planning focuses on things people can do to preserve their wealth and to achieve their financial goals, whereas estate planning is documenting important things to occur after one’s death such as who will get which assets.
Financial plan basics
A plan that speaks to a person’s finances clarifies his or her personal financial goals and can provide a map on how to meet those goals. It may include such things as:
- Protecting assets
- Budgeting for cash flow
- Retirement funding
- Setting down clear financial goals
- Funding for education
A financial plan should be a living document and needs to consider that life throws curve balls at times. The union between a financial plan and an estate plan is that a financial plan should also consider the distribution of wealth when the person dies – namely, an estate plan.
Estate plan basics
A comprehensive estate plan needs to dictate how assets will be distributed. It has an executor(s), beneficiaries and includes a will, power of attorney and other legal documents. Often financial planners and lawyers work together for a client, unless a law firm also has experience in financial planning.
Estate planning and financial planning play an important part in the lives of Ontario residents, albeit for different reasons. A lawyer who can offer advice and guidance on both these aspects is the ideal situation. Both estate planning and financial planning are ongoing processes and need updating as life changes.