Here, common mistakes people make when planning their estates.
In an ideal world, we would live long, healthy lives with just enough warning of our impending demise to get our affairs in order. In reality, many of us won't get that chance. We could die unexpectedly, or an illness or disability could rob us of the ability to make decisions for ourselves. We might procrastinate a little too long and leave our loved ones without the information they need during a stressful and difficult time.
Estate planning is a difficult task to tackle, but one that shouldn't be rushed. Watch for these common mistakes.
Mistake 1: Not having a plan
Think estate planning is for someone older or richer than you are? Experts warn we all need an estate plan regardless of our age, marital status or financial status. No matter how much we have, it's our chance to have a say in how our assets are divvied up when we're no longer around. Clearly stating your wishes can save your family a lot of confusion and disagreement.
What happens if you die without a will? (A status known as "intestate".) The law gets to decide how much of your assets go to which parties -- namely spouses and blood relatives. The defaults may not work for you, especially if you have a blended family. Things get even stickier if your heirs don't live in the same province you do.
Mistake 2: Thinking all you need is a will
A will is important, but it doesn't cover things such as accounts to which you designate a beneficiary, jointly owned properties or businesses, and joint bank accounts. Wills don't tell you how much in capital gains tax your loved ones may pay -- or how this tax will be paid.
Experts say we need to look at the "big picture" and tend to other aspects of our finances. For example, we should designate beneficiaries for things like our RRSPs and pension benefits (if applicable), and make sure we have adequate life insurance. Beware that naming your estate as a beneficiary rather than a person can keep your money tied up for longer.
Don't forget to name a power of attorney -- chances are you'll need one before you need an executor.
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