Common Estate Planning Mistakes

 

Although most people (78%) have no experience in managing an Estate, more than 80% of us choose a family member or close friend as our executor, according to a CIBC poll.  While family and friends may be dependable, more often than not these people have no practical knowledge of the responsibilities associated with having the title.

“If you appoint (someone) without the appropriate experience, it could cost your estate thousands of dollars, as well as months or even years of angst for your loved ones,” says Jamie Golombek, managing director, tax & estate planning at CIBC.

 

Three Common Mistakes

Underestimating the time involved in administering an estate

The CIBC poll found that 38% of people thought it would only take about six months to administer an estate, while two-thirds thought it would take less than one year.  In reality, tax errors, litigation and other complications can delay an estate’s administration for months if not years.
 

Choosing the wrong executor

The responsibilities of an executor include funeral arrangements, valuating estate assets and liabilities, filing tax returns, collecting insurance proceeds, and accounting for the estate’s financial activities.  Your executor will need the time and skill set to deal with many parties, including lawyers, accountants, financial institutions, insurance companies, government agencies and beneficiaries.

Preparing your will and then forgetting about it

Your will should be reviewed at least every five years.  Other changes that should trigger a review include a marriage, divorce, birth, diagnosis of a critical illness, or moving to another province and/or country.  Be sure to keep good records and make sure your executor knows where to find your will.  Too many times an estate is delayed because the will or other crucial documents can’t be found.

The obligations of an executor can be quite daunting, it is important to discuss them with the person you have chosen to make sure they are up for the task.  Alternatively, if you have agreed to be someone’s executor; make sure you understand their wishes; even ask to see a copy of the will so you can be fully prepared.

 

Have a great weekend,

 

Tracey

 

 

Source:  advisor.ca