1. Never Finding Any Time
This is the first and biggest mistake people make — they never do any estate planning. Why does this happen? Are we really too busy or is it that we just don’t know how to get started? For most people, it’s trying to find all the answers by themselves. That’s impossible. You need to find out who can help you find the answers you need.
2. Not Having Any Plan
Many people leave things to chance because they think they’re not rich. It’s a mistake thinking the people you leave behind will automatically manage and figure things out. In every family there are differences of opinion concerning money.
Problems can occur whenever someone else must try to interpret what you want done.
If you don’t bother making an estate plan, the government will provide one by default. Their idea of what happens to your money leaves no room for your personal wishes, flexibility, or tax savings.
Your personal estate plan lets you decide what happens to your money and everything else that is valuable to you. You need to learn how to give away all your stuff to keep the government rules from doing it for you.
3. Paying Way Too Much Tax
The government has ways to make you pay taxes even after you’re gone. If you have a vacation property, a business, substantial investments, or even a registered pension plan, don’t think you can give these away tax-free.
An estate plan can give away your property and reduce, or altogether eliminate, taxes. Think how grateful your beneficiaries will be.
4. Not Making Your Will
If you fail to make a will, the government writes one for you. You have no say about who is in charge of your estate, who gets a share of your money, or how and when it is distributed. You also lose the chance to use any tax-reduction strategies.
Yet people die all the time without having a will. Why? Often they have no idea what is involved in making a will or why it’s the cornerstone to every estate plan.
Wills are legal documents that must pass certain legal tests. Judges are often called upon to interpret or declare homemade wills invalid. Don’t try to make a will by yourself. Invest in a professionally prepared will to get peace of mind. Start your research by finding the right advisor.
5. Becoming a Target of Financial Abuse
Who can protect you and your money if you no longer can? Don’t think that your family, spouse, or children will automatically have access to your bank accounts to pay your bills.
Your estate plan should include power of attorney documents. You sign these written legal documents to designate someone as your agent to make financial and/or health decisions for you. You can choose who will control your money and make health-care decisions when you no longer can.
6. Not Dealing with Insurance, Business, and Charities
Missing an opportunity to deal with these items in an estate plan can be devastating.
There are certain tax-free advantages with insurance or a qualified incorporated business. Your estate plan should always consider these items to capitalize on the benefits.
Donating to charity, religious, or public causes as part of your estate plan can reduce your income tax liabilities. Giving to charity can be rewarding in more ways than one.
7. Not Updating Your Plan
No estate plan will work if it is out of date. Learn why updates are necessary when changes occur, including:
• a change in your personal relationships (marriage or divorce)
• new children, grandchildren, or stepchildren
• changes in your legal and moral obligations
• moving to another province, state or country
Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of seven estate books. © 2013