Wealth transfers – avoiding costly mistakes

Estate planning is just like planning a trip, leave proper instructions, including keys (safety deposit box keys), to people you trust. When you have been an executor, you know the kind of patience you need in dealing with a family members estate. Rarely is it easy, and when it is, something usually gets missed.

Leaving an estate to family members can cause more problems than you might think. Family disputes after all can be avoided with careful, well though out planning.

The first step is communication. I usually recommend that parents discuss with their children their wishes, not specific dollar amounts, but what their general intentions are. Another great idea I picked up along the way is an estate binder.

A binder or file containing relevant documents for the executor. This would include copies of important documents including will, insurance policies, property titles, investments and banking info. Also include important contact info such as tax and legal advisor financial and insurance advisor.

Here are some common errors that keep executors up at night.

Not having a will or being able to locate a will. Hey, make it simple to find if you have one. What if your family doesnt know its in the safety deposit box?

Not having declarations in the will in regard to gifts is another mistake. If you plan to leave gifts, make sure it is clearly spelled out in your will. Unused charitable tax credits are non-refundable credits upon death. Make the most of your final tax return. Assets that are joint with children do not form part of the estate. If there are assets left in the will, is it in equal proportion to the children, or did one child receive an equal part in the will and an unequal part outside the will as a joint account holder?

Another common error is when parents forget that they made some assets joint and one child is left asking about joint accounts with another family member.

Lack of records is a common problem with executors and family members. Hey, mom and dads records are a big mess. What can I do now to simplify.

One idea is to make an up to date statement of all investments and write a note: Based on our records, all information is up to date as of June 2005. You do not have to search every bank in Canada to find out where our money is.

Communication and a bit of record keeping may help you and or your executors sleep better and avoid family arguments.

Written by Grant Hicks

Grant Hicks, C.I.M., FCSI is a professional speaker, co-author and a Retirement Planning Specialist with Manulife Securities and Hicks Financial. A leader in the financial industry, Grant has been helping Vancouver Island residents plan and create their retirement lifestyles since 1989.

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