Estate Planning is a specialized field which requires expertise from the financial, legal, insurance, and accounting professions working together in partnership. The key to estate planning is a coordinated approach which offers independent professional and follow-up service as required.

Settling an estate can be devastating to family's finances. Heirs are often left with many unanticipated expenses, ranging from debts to taxes to administrative fees. Court and probate records show that in 75% of the cases, the estates do not have the cash to pay for these costs. So, heirs are often forced to liquidate assets, like the family home... or the family business. This hurried liquidation can effectively reduce an estate to a fraction of  its former value. 

To avoid the possibilty of liquidation, we recommend you watch for some of the more common pitfalls of  estate planning, which we've listed below.

1. Failure to Make a Proper Will and Revise It Periodically
Failure to properly prepare a will surrenders the right for the deceased to have his or her property distributed and effectively allows the province/courts to take over that task. Even after a will has been prepared, it may be seriously outmoded at death unless reviewed periodically.

2. Lack of Flexibility in Planning
A will must be drafted with enough flexibility to permit heirs and beneficiaries to deal with emergencies or changing needs. Typically, a will will be designed to take into account not only current family requirements, but also future needs. Planning for the future, however, should not override basic necessities. For example, a decedent may provide for a child's college education without permitting proceeds to be diverted for any other purpose other than college, although the money is desperately needed for food and shelter.

3. Not Enough Liquidity at Death
If an estate plan does not provide enough cash to cover final expenses, valuable assets may have to be sold immediately, frequently at a fraction of their value. Therefore, the possibility of estate shrinkage must be considered when preparing an estate plan. The best solution is Life Insurance. Why? It can provide the required liquidity at death; the proceeds are usually not to income tax;  and when properly structured, may not be subject to applicable estate taxes.

4. Failure to Plan for Disposal of Business Interest
Intelligent planning can provide a guaranteed buyer for a business interest at a guaranteed sales price with assurance that money will be on hand instantly when death occurs. Another option is for heirs to continue the business. Advance planning will give them the best possible chance of succeeding.

5. Failure to Arrange and Integrate Life Insurance with Other Assets
Life insurance policies should be checked periodically and integrated with other assets, such as Government Benefits and investments, stocks and bonds, to form a cohesive plan.

6. Failure to Take Advantage of Tax Saving Mechanisms
Estate plans should be reviewed annually to make sure that any tax law changes are reflected in the plan and to take advantage of any new tax-saving method. In fact, any properly drafted estate plan will strive for the greatest tax savings possible.

7. Failure to Plan for Retirement
Retirement plans and goals must be specifically identified. Unless such plans are known, an estate planner cannot determine whether sufficient funds are available to accommodate retirement objectives and desires. Retirement planning and the next pitfall are interrelated.

8. Over dependence on Government and Employer-Provided Insurance and Pension Plans
Government Benefits and pension benefits may be considerable. But over reliance on them can be disastrous. For example, if an individual changes jobs and fails to convert group insurance coverage on time, he or she may become uninsurable and die grossly underinsured. In another case, an individual may decide to return to work after retiring. If so, he or she may lose most of the retirement benefits because of regulations governing earnings.

9. Failure to Apportion Sensibly
Funds should be allocated based on your risk tolerance. This means that life insurance and an emergency savings account should be primary concerns. Higher-risk investments may be appropriate if your risk tolerance so permits.

10. Failure to Prepare an Estate Plan and Review It Periodically
Proper planning and periodic reviews can help eliminate most common estate planning pitfalls.

 
How can you keep what you have spent a lifetime accumulating?

How can you make sure that the bulk of your estate is passed on to your family and not to Revenue Canada?

For many years, ken@ritepartner.com">Ken, MacCoy, RHU and The RitePartner Resource Team have specialized in both creating and conserving estates. We are knowledgeable and qualified professional in using insurance to create solutions to your estate-related financial problems. We will assist you in custome designing a program that will help insure the distribution of your personal assets in the best interests of your family and/or business.