Estate planning is very similar to planning a trip: leave proper instructions, including keys, to people you trust. If you have been an executor, you know the kind of patience that dealing with an estate requires. Rarely is it easy; and when it is, something usually gets missed. Leaving an estate to family members can cause more problems than you might think. Family disputes can be avoided with careful, well-thought-out planning.
The first step is communication. I usually recommend that parents discuss with children their general intentions–not specific dollar amounts. Another great idea I picked up along the way is to create an estate binder (also referred to as an estate directory), a document containing relevant documents for the executor. This includes copies of important documents such as the will, insurance policies, property titles, investments, and banking info. Include important contact information for any tax, legal, financial, and insurance advisors. Your executor will lose sleep if you have no will or if it cannot be easily located. Your family not being aware of your will, or the will being kept in a safety deposit box, is not helpful? Also a problem is when there are no declarations in the will regarding gifts. If you plan to leave gifts, make sure that they are all clearly spelled out in your will.
Make the most of your final tax return. Assets that are jointly owned with children do not form part of the estate. However, according to the Supreme Court, when aging parents transfer joint accounts to adult children, there is a presumption of “resulting trust”, namely, that the child is holding the property in trust for an aging parent. This is a rebuttable presumption, meaning that the child can easily show otherwise, if the parent properly documented ownership with a co-ownership agreement, which avoids challenges and going through probate. If there are assets being bequeathed, is that done in equal proportion for each of the children? Or did one child receive an additional part outside the will as a joint account holder? Lack of records or disorganized records is a common problem for executors and family members. To simplify, you could make an up-to-date statement of all investments with a note such as, “These records are up to date as of June, 2021; you do not have to search every bank in Canada to find out where our money is.” Communication and a bit of record keeping may help you and or your executors sleep better.
