- Only 55% of Canadians have a will and only 40% have powers of attorney drawn up. That figure drops significantly (to 22% and 9%, respectively) for Canadians under age 35.
- Only 32% of American adults reported having a will in 2024.
Most people would agree that we are living in uncertain times. We all know of someone who was unexpectedly struck with cancer or was in an accident.
Life is not fair, but it doesn’t mean we can’t do our best to guard our wealth and our legacy. Having one’s affairs in order is always an important but often neglected piece of financial planning.
The key is to do it right. Just as there’s a huge cost to not doing it at all, the cost of not doing it correctly can have unfortunate consequences.
Here are the top four mistakes I see women make when creating a will, as well as some tips on what to do:
Mistake #1: Believing a Will & PoA is a DIY Project
I come across a lot of women who will scrimp on a do-it-yourself will-kit instead of paying a professional estate lawyer a few hundred dollars to draw one up.
What most of them don’t understand is that if the will-kit is prepared incorrectly – that is, if it’s not signed according to laws in their jurisdiction, or if the information is vague, wrong or open to interpretation – their estate is likely to end up being dealt with in the courtroom. The cost of this (not to mention the time spent) will far exceed the fees one pays to a lawyer.
My Advice:
Consider a DIY approach only if your situation is simple and straightforward and you can absolutely and unequivocally appoint your executor, identify your beneficiaries, and feel confident your decisions will not be contested.
However, if you have a blended family, are separated or divorced, have a business or children who have special considerations, I can’t stress this enough – engage an estate lawyer.
READ 27 Personal Financial Planning Tips For Women in Any Situation
Mistake #2: Not Updating Your Will To Reflect Life Changes
Most women will consider getting a will when they have their first child or when they’re gravely ill. However, there’s a lot of “life” that happens in-between that can completely change one’s financial situation (i.e more children, a divorce, a new business, marriages of children, a new marriage with stepchildren, grandchildren, death of a family member, etc.,)
Most of these circumstances Will require a will to be updated along with a review of one’s financial situation and goals. In fact, a change in circumstances can make the current will obsolete.
For example, many are not aware that a Will may be nullified by marriage unless specifically stated that there is an intended marriage – again depending on the jurisdiction,
My Advice:
If you have a major change in circumstances, speak to a lawyer about redoing your Will and Power of Attorney. Don’t think simply writing over the old will, will make it legal. There are procedures that need to be followed to validate changes.
Also, be sure to store the most recent copy of your will in a safety deposit box and a second copy with the law firm or trust company. Add a note indicating that it is indeed the most recent copy.
Just because you have a will doesn’t mean your estate plan will be executed smoothly.
Mistake #3: Picking the Wrong Executor
Don’t ever underestimate the importance of the executor role and the time required to settle the estate. In fact, choosing the person who will oversee your estate is the most significant decision one can make.
I’ve seen too many people choose their eldest child or partner (just because) without properly assessing whether they’ll have the knowledge, time and ability to execute on their behalf in a timely manner.
They need to:
- Be organized and effective to manage the amount of work that may be needed.
- Be calm to manage the possible uncertainty that could come with the execution; and
- Have strong social skills to deal with the beneficiaries.
- Know you well enough to understand what you would want and how you’d want your assets to be distributed.
My Advice:
Consider appointing a corporate executive if the estate is complicated or if you have trouble finding a suitable executor. Set aside a lump-sum payment to your executor for their time and effort in carrying out your wishes. And, make sure you’ve discussed the appointment with your executor and they know where to find your will.
Confronting the Taboo: The fear of death is one of the most common reasons for not wanting to make a Will.
Mistake #4: Thinking a Lawyer is Enough
A common error I see is that a will is done without the input of estate-planning professionals. Engaging a lawyer is not always enough.
I’ve seen this scenario play out many times: Someone dies, their assets are distributed to a beneficiary, but because this beneficiary is not a spouse, it triggers a “deemed sale” which in turn triggers a huge tax liability for the beneficiary. They want the asset but they have to pay for it. But they may not be able to pay for it.
Here’s another scenario: A parent “gift” their cottage to all three of their kids but only one wants it so he/she has to buy the others out…except they don’t have money. So the kids are forced to sell their beloved cottage and with it all the wonderful memories.
Essentially, the result is that what the deceased intended has created more problems.
My Advice:
Engage a tax-planner and a financial planner, especially if your estate is complicated. They can help you sort through different scenarios, the financial implications of those scenarios, and suggest a plan. Sometimes they can suggest an insurance or investment product that may solve any potential problems that may arise.
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