Many people delay estate planning, assuming they have ample time or that it’s only relevant to the wealthy. However, unexpected events happen, and failing to plan can create significant stress and hardship for loved ones. Estate planning, though sometimes daunting, is crucial and should not be rushed. Here are some common mistakes to avoid:

1. Lack of an Estate Plan:

Regardless of age, marital status, or net worth, everyone needs an estate plan. It’s your opportunity to dictate how your assets are distributed according to your wishes. Dying “intestate” (without a will) leaves these decisions to the law, often with unintended consequences, particularly for blended families or those with heirs living in different provinces.

2. Thinking a Will is Enough:

A will is essential, but it doesn’t cover everything. Beneficiary designations (e.g., on retirement accounts), jointly owned property, and joint bank accounts bypass a will. Furthermore, a won’t address potential capital gains tax implications for your beneficiaries. A comprehensive plan should include beneficiary designations for assets like RRSPs and pension benefits, adequate life insurance, and a power of attorney (likely needed before an executor). Note that naming your estate as a beneficiary can delay access to funds.

3. Automatically Leaving Everything to a Spouse:

While leaving everything to a spouse seems logical, it doesn’t always guarantee assets will ultimately be passed on to your children or grandchildren. A surviving spouse could remarry, potentially diverting assets elsewhere. Consider alternative strategies, such as trusts for grandchildren’s education or lifetime gifts (particularly relevant if you live in a country with estate taxes).

4. Choosing the Wrong Executor:

Selecting an executor based solely on personal closeness can be a mistake. Treat it as a job requiring specific skills. Look for someone healthy, likely to outlive you, knowledgeable, organized, detail-oriented, and with good communication skills. While professionals (lawyers, accountants) can be hired, many opt for a trusted friend or family member. If appointing multiple executors, ensure they can collaborate effectively.

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5. Blindly Trusting Lawyers:

Lawyers provide valuable expertise, but you should still be an informed participant. Review all draft documents carefully, checking for errors. Don’t hesitate to ask for clear explanations of complex legal language.

6. Avoiding Lawyers Completely:

Unless you are a lawyer, professional help is generally necessary. A lawyer can explain options, ensure comprehensive coverage, and prepare legally sound documents. Laws vary by jurisdiction, making generic advice unreliable. While DIY kits may suffice for simple estates, a legal review is always recommended.

7. Neglecting Healthcare Directives:

Estate planning encompasses not just finances but also healthcare. Document your wishes regarding life-sustaining treatment and appoint a healthcare proxy/power of attorney to make medical decisions if you become incapacitated. These steps lighten the burden on loved ones and ensure your wishes are respected. (In Canada, legislation varies provincially; consult relevant resources.)

8. Illiquid Estate:

Capital gains tax is only one potential expense. Your heirs will likely have immediate costs, like funeral expenses. Ensure your estate has sufficient liquid assets readily available to cover these “final expenses,” as accessing investments, property, and insurance policy proceeds can take time.

9. Forgetting to Review and Update:

Life circumstances change, so your estate plan needs periodic review. Revisit your plan every few years, especially after major life events like marriage, divorce, the death of a spouse, or the birth of a child. Failing to update could result in blended family conflicts.

Estate planning is a complex yet crucial process. By steering clear of common mistakes, you can ensure that your assets are protected, your wishes are honoured, and your loved ones are cared for. It’s important to seek professional advice from an estate planning attorney and a financial advisor to create a comprehensive and effective plan that aligns with your specific goals. Taking the time to plan now will give you peace of mind, knowing that you have secured your future and that of your family.

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