Every day over a thousand Canadians turn 65. 70% don’t have current or valid wills, and 45% have not given any thought to their estate settlement issues. Very few understand the complex issues that their executors will face when dealing with their estate.
Many people designate one or more of their children or a trusted family friend as their executors. Unfortunately very few executors have any idea of what they have been committed to.
Where there are no wills, the province will decide how the estate will be distributed according to provincial laws. And designating children as executors can be a ticking time bomb. What happens when the children move to different provinces or even countries? How do you get documents signed when joint or multiple executors live thousands of miles apart?
An executor may have to deal with 17 other professionals from funeral directors, realtors, lawyers and bankers to advise, settle issues, sell stuff, to deal with the death of someone in a foreign country, property security and sale, or digital property.
The average estate value is $284,000 and climbing. On top of this, most people gather a lot of stuff in their lifetime which all has to be sold or disposed of. Grandma may have loved the salmon pink couch and loveseat but nobody else might!
Then there are the legal issues. Getting divorced or remarried may invalidate a will, so executors need to check the laws relating to matrimonial property in each province. Blended families can be a nightmare, especially for individuals who have remarried more than once. Add to this is the personal liability that executors can face, hence the increase in popularity of executor liability coverage.
The point of this is not to scare off future executors, but to be aware of what they are taking on and the responsibility and potential liability that comes with the job. People have literally torn houses apart to find a will or argued with the parent’s banks to open deposit boxes. I have seen families come to blows over who gets grandma’s silver tea service, the BMW SUV or a myriad of other valuable items not designated in the will.
If you’ve been designated as an executor, do your homework. Create a list of where all the legal documents are stored, where passwords, memory sticks, and other electronic storage devices are located. Make sure the passwords list is kept up to date. Best of all, help your aging parents or relatives prepare for the inevitable by having complete documentation as to their wishes and where their wills etc., are located to make the process simpler.
Investments and proceeds from life insurance policies can often be transferred directly to their heirs. Insurance benefits can be paid out tax free, and with the right beneficiary designations bypass probate directly to loved ones.
It’s vital that proper legacy planning and wealth transfer processes are put in place, as it’s too late to do any realistic planning once someone is permanently disabled or dies prematurely. Start by having a chat with a trusted financial advisor to help avoid any potential pitfalls.
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