Don’t Make These Mistakes When Planning Your Estate

If you’ve got any wealth or assets that are worth leaving behind, then you want to make sure that they go to the right people. Even if you don’t plan on going anywhere anytime soon, it’s important to make sure that the right plans are in place because you never know what might happen down the line. However, when planning your estate, it’s easy to make a mistake or two along the way that could see your wishes not being carried out in full or, worse yet, disputes over how to handle things. Here, we’re going to look at some of the mistakes you don’t want to make.

Not Having A Will

The most common estate planning mistake is simply not having a valid will in your name. If you don’t, then your estate is going to be distributed in keeping with the local laws, such as provincial intestacy laws, which might not reflect your wishes too accurately. It could end up with your assets going to distant relatives or being divided in ways that might cause conflicts among the people that you care about. What’s more, it can also make the process of administering your estate take longer, which can lead ot higher costs for your loved ones. With a will of your own, you have much more say in how your assets are distributed, who your beneficiaries are, and who you appoint as guardians for any children.

Not Updating Your Documents

Writing a will is all well and good, but if your financial or living situation changes over time, then you might want to revisit it. There are major events, such as a marriage, divorce, the birth of children, and the like, which might have you review who you want to leave everything to. Similarly, if you acquire any assets that will be included as part of your estate but are not covered by the existing terms of your will, then they’re likely to be doled out following the local laws. Similarly, you might want to check with your lawyer once in a while to see if any of the recent law and tax rule changes might affect your will as and when they are signed into law.

Not Choosing A Qualified Executor

A lot of people will choose someone who is close to them to be the executor of their will, without really considering whether they are able to handle that responsibility. An executor manages your estate, pays debts and taxes, and distributes assets according to your will. They are legally required to follow your wishes as best as possible, if they agree, but choosing someone unprepared, unwilling, or not located nearby can lead to delays, errors, and disputes that can waste time as well as the money that you want to lend to others. Choosing a trustworthy, competent executor is crucial, and many hire a professional for just that purpose. 

Failing To Plan For The Costs

Aside from the costs of hiring someone to help with your will (which is vital, as it can make sure it’s less likely to run into delays and disputes), there are other financial concerns and costs you need to keep in mind. Some places have inheritance taxes, while others might have other costs like deemed disposition taxes and probate fees. Understanding which costs are going to apply to you and how they might affect the assets you want to leave to your family is crucial. There are online calculators you can use to estimate how much they might be, which can help you better plan your estate with strategies like gifting during your lifetime, using your trusts, or designating beneficiaries for specific, separate accounts.

Not Planning For Incapacity

We all tend to think of our estate being handled when we’re no longer around, but many of us might be alive yet not really capable of making our own decisions for some time before then. Establishing powers of attorney not only ensures that your property is handled how you would prefer, but that your wishes are taken into account when it comes to questions of care, as well. Without PoA documents, if you’re not able to make decisions due to illness or injury, your family might have to go through time-consuming and costly court procedures to gain the authority to make important financial and healthcare decisions. Consider any potential incapacity in the future and appoint trusted individuals in advance.

Not Keeping Beneficiaries Up To Date Outside Your Will

While you might have most of your assets divided in your will, there are some accounts that you might need to establish outside of that. For instance, if you decide to change beneficiaries, then you might want to update RRSPs, TFSAs, and life insurance policies. These designations often override instructions in your will, meaning that not updating them can see unintended recipients receiving your assets, especially in the event of any changes ot your family. Neglecting this step can create confusion, legal disputes, and financial hardship for intended beneficiaries. 

Not Talking About Your Intentions With Your Loved Ones

All too often, the way that assets and wealth are divided as part of a will can come as a surprise and a shock to the loved ones of the person involved. While some avoid discussing their estate plans to avoid any arguments or conflict, a total lack of communication is only likely to create misunderstandings and disputes down the line. Unclear expectations about who gets what, who is the executor, and any end-of-life responsibilities you want people to follow can create tension, which can lead to legal disputes down the line. Openly talking about your intentions gives your family the chance to understand your decisions. They might have some questions on the way, but transparency now is better than conflict after you’re gone.

Wills and estate law can be a tricky business, and there’s always room for error. However, with the tips above and the right professional assistance, you can make sure that you’re not making any major mistakes.