Planning how your property and assets will be distributed at the end of your life is never a comfortable subject, but it’s imperative that when you do address it, you avoid estate planning mistakes by consulting a professional. Regardless of your assets’ worth, small oversights can lead to large disputes, and in some cases, litigation lawyers are hired and relationships are ruined.
At Nanda & Associate Lawyers, we understand how difficult it can be to think of every possibility when circumstances are so unpredictable. You might not be sure exactly how you want your property distributed, but you certainly don’t want your beneficiaries entangled in probate law and civil litigation. That’s where our team of skilled estate lawyers comes in.
Our law firm in Mississauga has a wide variety of specialties, and our consolidated 150 years of experience helps us foresee potential pitfalls and opportunities. Bring your estate planning to us and have all your assets handled—from cash to real estate, our lawyers will take care of it. Here are some estate planning mistakes that could hurt the likelihood of the terms of your will being honoured:
1. Not Updating the Papers
Maybe you were uber-responsible and made sure that your will was taken care of as soon as you had any assets to speak of. However, nobody knows when their life will end, and if you don’t frequently revise your estate planning, mistakes are unavoidable. You may list beneficiaries that are no longer living or exclude children who were born after you drafted it.
Several occasions call for an updating of a will, like marriage, divorce, bereavement, and buying a house. In some cases, a will might be so outdated that the entire thing is nullified because it could easily be contested for legitimacy. Furthermore, assets could be left unaccounted for and subject to probate law which may not place them in the hands that you’d prefer.
If your reason for making a will is to ensure financial security for your loved ones, then revising it annually is a good practice. However, you don’t have to do this yourself. If you entrust planning to a wills and estate lawyer, they can handle the updates and keep you in the loop as laws and circumstances change.
2. Keeping the Contents Of Your Will A Secret
The main reason anyone would seek to contest your will is if they were unhappy with what they were left, or rather, not left. However, as the owner, it’s at your discretion who your beneficiaries will be. The best thing to do is to make sure that your choices are known when you make them so that anyone who takes exception can approach you.
You might be able to give them a reasonable explanation or at least assure them that you know what you’re doing and believe it’s for the best. Many fear that sharing this will cause unrest and competition, but this will only be worse if it comes out when the will is read.
If you have three children and all but one inherits real estate, a lawyer could be hired by the third to dispute the will. At this point, you won’t be able to offer any explanation or defend your choices, and even if your terms are iron-clad, and nothing comes of the dispute, it’ll still create rifts in the family.
Furthermore, there are plenty of small estate planning mistakes things that could be escalated. When guardianship is involved, one could make the case that your will goes against the best interest of the child, and your choice of trustee or executor could be questioned and even replaced. Sometimes, family members will even submit support claims stating that they’re dependent on the inheritance.
When people are given a chance to come to peace with what will or won’t happen within your lifetime, it makes sure that they’ll have no problems in their time of grief. Along with that, if it’s clear that you made the will in sound mind and there were no secrets, it’ll make it harder to make a case saying otherwise.
3. Forgetting Business Interests
Your business or shares in a company are your assets, but beware that transferring ownership is complicated. You might unwittingly bestow a sizable tax penalty or violate rules of ownership. On the other hand, some leave corporate assets out of the will entirely, and they’re simply missed. However, if you have legal knowledge in your corner, then you can have a hand in determining who inherits without causing a shareholder dispute.
If it’s a controlling share, you have to consider how it’ll be handled by the beneficiary and whether it makes more sense to gift it within your lifetime to get some exemptions. You can discuss this with a professional familiar with your territory or province, so if your business is in Brampton, then consult a law firm serving Brampton.
4. Missing Bank Accounts
Most of your liquid assets will be in one or many bank accounts, and those are the funds that the family is most likely urgently to need access to. This could be used to pay for final expenses, burial, and more. Your lawyer might recommend adding an account holder and giving them the right of survivorship, but this can create complications during your lifetime.
When you book an appointment with a lawyer, take copies of recent bank statements and be prepared with the way you’d ideally like things to play out after you pass. Based on your assets, you’ll get options that serve your purpose, or at least come close.
If you don’t mention accounts on the will, they’ll be classed as intestate and go into probate, where they’ll be subject to red tape and complex policy before the inheritor is determined. There are plenty of quicker and easier ways to ensure that your beneficiaries don’t have to struggle to access funds.
5. Placing Too Many Conditions
Canadian lawyers will attest that there’s an art to the wording of a will. Being too specific can open it up to contest, and being too vague can open it up to contest. As a delicate matter, a layperson can’t be expected to manage the terms and keep up with evolving policies.
One of the common estate planning mistakes is trapping yourself with your own words. Even if you update your will regularly and choose your words carefully, remember that you have no idea how circumstances will change, and so will the implications of your words.
6. Forgetting About Probate Taxes
There’s no inheritance tax in Canada, but the transfers of ownership can incur taxation in some cases. If your estate isn’t too large, or you’re not leaving too much to one person, then beneficiaries might be tax-free. There will, however, be a one-time tax for transfers of ownership for certain assets.
Note that if you leave a non-liquid asset to someone who can’t pay taxes, then they might be out of pocket. There’s no way of knowing when they’ll get access to both, and if liquid assets are processed for longer, then your beneficiaries will be in a bind.
Furthermore, if the taxes aren’t paid within a few years, they could increase.
7. Listing Minors As Beneficiaries
A minor can’t inherit because they’re not capable of managing funds or property. If you have underage children, you can assign a trustee on their behalf by submitting papers to the OCL (Office of the Children’s Lawyer) so that their assets will transfer to a trust and remain invested until they turn 18. Before that, the trustee will operate the trust and continue to invest and nurture it if your application is successful.
To have a higher chance of success, choose someone with experience managing funds who won’t appear to be a threat to the child’s interests. In many cases, parents or guardians are also rejected because they could have a conflict of interest.
If you fail to assign a trustee, then funds go to the court to be managed, and while the child will still get them back, most would be more comfortable knowing their children’s future is in familiar hands.
At Nanda & Associate Lawyers, we serve multiple locations, including Toronto and deal with complex and varied cases that give us a wealth of insight into the emotional side of legal matters. We understand how important it is to keep clients in the loop and assured, which is why we’re always happy to sit down and discuss technicalities.
Disclaimer: This article is only intended for educational purposes and shouldn’t be used as a substitute for legal advice.