Estate Planning Part 2: Four Common Mistakes

Posted by on Nov 22, 2010 in Wills and Estate Planning | 0 comments

Whether we like it or not, some parts of life are complex. We need help with areas where we lack experience or expertise. This is certainly true when it comes to certain legal, financial and tax matters – all of which can come into play with estate planning. But emotional pitfalls and relationship issues can also arise during estate planning.

Here are four common estate planning mistakes to avoid:

Mistake #1: Not changing your documents as you and your family experience life-changing events.

There are dozens of life-changing events which should trigger the review of your legal and financial decisions. These include health problems, employment and business changes, births and deaths, marriages and divorces. For example, divorce does not invalidate a current will, but marriage does. If you purchase property outside your province of residence, the tax rules and laws of that jurisdictions may also affect your estate plan. 

Mistake #2: Joint ownership with or investments on behalf of children.

Many parents consider joint property ownership with children as a tax-saving strategy. But property jointly owned may be vulnerable to claims by your child’s creditors – or spouses in cases of divorce. Similarly, making investments in a child’s name does not guarantee that the investments will belong to the child upon your death – unless reflected in your will.

Mistake #3: Preparing your own documents.

The examples above may show that both professional legal and tax advice are key factors in sound estate planning. By looking to save on professional fees to have your will prepared, you could end up costing your estate much more, and cause added grief to family members and other beneficiaries. It’s all in the details and the experienced oversight that professionals bring to the table. They are trained to catch the small mistakes or omissions that can make a huge difference.

Mistake #4: Not explaining estate decisions to beneficiaries.

Some people use their wills as an opportunity for “settling scores” or to establish personal power from “beyond the grave”. First and foremost, consider your motivation and how you would like to be remembered. Where a will is likely to be contentious or leave important questions unanswered, consider talking about the reasons behind decisions in your will while you are still alive. If that’s not possible, leave a letter with your executor to share with beneficiaries. Don’t put an executor in the difficult position of trying to explain or interpret your wishes.

***

Our estate plan can be one of many vehicles that reflect our personal values and how we have lived them. Whatever we leave materially is only part of our legacy. But the way in which we order our practical and financial affairs gives us an opportunity to create maximum benefit and minimum burden for others. A good estate plan can serve as a powerful symbol of a life well lived – and an “end of life” well-planned.

© ElderWise Inc., 2010
Vol. 6, No. 11
You have permission to reprint this or any other ElderWise INFO article, provided you reproduce it in its entirety, acknowledge our copyright, and include the following statement: Originally published by ElderWise Publishing, a division of ElderWise Inc., Canada’s go-to place for “age-smart” planning. Visit us at http://elderwise.memwebs.com/ and subscribe to our FREE e-newsletter. 

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