The Most Common Estate Planning Pitfall – Failure to Plan

By Clarence Peters

Most people think that I’m a fairly proactive person who gets things done.  They may not have the whole picture.  I have a flaw that is common to a lot of people.  It leads to the most common estate planning flaw in the world.

First, let me provide a context.  We’ll be presenting a series which will eventually highlight seven common estate planning pitfalls and how to address them.  This is the first article and frankly, I’ve been dragging my feet on getting to it, which is exactly part of the problem when it comes to Estate planning.  I’ve often tried to live by the principle, “Do the things you’ll be glad you did.”  But I’m human and don’t always get there.

You see, I’ve known for a while now that my Will is not exactly what I want anymore.  Charitable possibilities have changed, and I now have grandchildren.  We need to make some changes.  I’ve known this for a couple years.  Have I done it, even though it’s easier for me than most people?  No.  Why not?  Well, more on that later.

Failure to plan has to be the number one pitfall we’ve seen in our work as estate planners.  It shows up when we’re called to the hospital to take Will instructions.  It shows up when people have a flight coming up and they make a rush appointment.  And most unfortunately it shows up in distraught survivors who have to deal with the mayhem left behind.  Let me give a few examples.

Some people never get to making a Will.  They think they don’t need a Will because, “I don’t have much.”  Guess what!  Everyone has something.  Most commonly, they have a phone plan, bank account and possibly utility bills.  Everyone has a source of income, whether from the government or elsewhere.  Everyone also has taxes which must be done and usually there is a death benefit.  Just try dealing with this if you are family and you are not named as executor!  Only a Will can assign an executor.  Yes, you might be named as Administrator in the absence of a Will, but it takes money and a court process to do it.  There’s a great video of what makes a Will so important on this page: https://mtrust.net/wills/

Some parents don’t realize that should they both pass, leaving dependent children, that the courts will have no direction in naming a guardian.   Families may fight and the final outcome might be completely undesirable.

Too many people die without a Will and some have a lot more than most, with Prince and Aretha Franklin among them.

At MTL we don’t want that to happen to anyone in Saskatchewan, so we’ve provided a discount to first time plans, good to Dec 31.  Newly married couples get a free plan!  You may want to tell friends and family about this if you already have a Will.

Some people don’t make a Will because they are undecided about one or two bequests.  They may not realize how talking to an estate planner may open up possibilities they haven’t thought of.  And in the end, having something solid in place is better than nothing at all.

We hope you’ve got a Will that you like.  Give yourself a checkmark.  Now ask whether you might need further planning; most people do.

Some people haven’t given any thought to titles or bank accounts and have no idea if they are structured correctly.  All too often we see situations where a couple thought everything was jointly owned when it wasn’t.  That can lead to the demand for probate, where court documents are submitted and fee applied ($7 per $1000 value), which may be unnecessary and costly.  At MTL we review those items with you and even do a title search for each planning session.  We also ensure your Executor will have a good record of your property items to be able to get to work quickly.

So you have a Will, and properly structured titles and bank accounts.  Great!  Now how about those financial needs upon passing?  How would your dependents survive if your income stream were to disappear next month?  Life insurance can provide that margin of peace for a season of life, or for the whole span. 

Still others, who really do have very little, fail to plan for final expenses such as the funeral.  They leave their relatives in the awkward position of having to pay.  Sometimes there is further joint debt which makes the burden even heavier.  Prepaid funerals can be arranged and provisions made for debt repayment.  But obviously, this planning must happen before death!

We also see individuals who remarry, but who do not do their homework.  They assume that their families will work things out without an explicit agreement in place.  In almost all cases, an inter-spousal agreement would do wonders to smooth the way and add clarity to those who will administer the estate.

Estate planning might not be as fun as a trip to Disneyland, but it is so important. At most points in life it doesn’t seem urgent, however, so we procrastinate.  We feel no imminent threat, and so, we assume it can safely be put off for another day.  Most of the time we are correct, and that’s part of the problem.

So in light of the often dire consequences of an inadequate plan, how do we get motivated to “get ‘er done?”

People who read the Bible may be spurred into action by such verses as 1 Timothy 5:8 which says, “Anyone who does not provide for their relatives, and especially for their own household, has denied the faith“.  The Scriptures place a high value on looking out for one another as best we can.

It really is care for others which is the prime motivation in making a good plan.

How’s your plan?  Is it sound?  Are you certain that it is logical, thorough and legal?

OK, I think I’ve got this article nearly complete.  Now what about my own plan?

I suppose I have most of the boxes checked, but my Will is still out of date.  How do I get motivated?  Well, I set a date.  I’ll work with MTL to complete my Will instructions before this article gets published.  Since I’m telling you about it, that will surely hold me accountable.  And, of course, my wife will be involved, so it will have to happen or I’ll be in trouble.

“Just do it” becomes more likely when we involve others.  So pick up the phone.  Tell someone.  Text or message someone.  Make an appointment.  It feels great when we’re all caught up.

I’m going to add a little more to the principle at the beginning, “Do the things you’ll be glad you did – the sooner the better.