Estate planning blunders: How not to give your wealth away

Today, on our legal knowledge blog, comes a story of estate hijinks and will-writing woes. We're going to dive into the world of estate planning gone wrong.
Estate Planning Blunders: How Not to Give Your Wealth Away

Picture this: You’ve spent a lifetime accumulating wealth and assets, and now it’s time to pass them on to your heirs. Easy, right? Well, brace yourself because estate planning can go wildly wrong, especially when you don’t plan carefully.

Mistake #1: No Will

Kim was a charming lady with a penchant for procrastination. She thought she had plenty of time to draft her will but, alas, time waits for no one. Misadventure found her on a capsized sailboat in Desolation Sound. Oh, sweet serendipity.

Without a will, her spouse of six months ended up with most of her estate and her young child was left in the middle of a courtroom nightmare, as he and her parents vied for guardianship. Her paintings, which her best friend had always loved, ended up in a trash heap. Moral of the story: don’t let your estate planning drop to the bottom of your priority list like Kim’s sailboat in the ocean.

Mistake #2: The Vanishing Will

Charlie was doing well. He had a house, a rental property, kids, and grandkids – all you could ask for, really. He’d planned to split things, divide the house between his kids and keep the rental property for his grandkids future. He went to a lawyer, had the will drawn up and stored it in his filing cabinet.

Thirty years later, after several moves, numerous family ‘situations’ and yearly spring cleanings, he passed and his will was nowhere to be found. His lawyer, now also deceased, should have kept a copy, but his files were lost in a fire. No will and it’s presumed destroyed. Sorry beneficiaries. Good thing digital wills are now a thing.

Mistake #3: The Sticky Situation of Unpaid Debt

Next, meet James, a loving uncle who always put his family first. Unfortunately, his retirement plan ended up being a financing plan for his nephew’s new restaurant – guaranteed risk free and without a hint of documentation. Well, as luck would have it, a year later, the restaurant went under, James had a heartache at the news and his savings were gone without a single bit of evidence.

James’ heirs of course had no recourse to recover the money, because no evidence existed – not even his word. So the nephew, who was otherwise doing fine, kept mum about it all and never repaid a dime.

Mistake #4: RRSP to the Rescue

Our final estate planning misadventure involves the enigmatic Ms. Abernathy, a bookkeeper who prided herself on her conservative financial planning and her excess of retirement savings. Somehow she’s saved a very healthy nest egg on a small salary, half in her RRSP and half in cash. With no spouse, and no house, she felt confident that by naming her son as the beneficiary of the RRSP and her daughter in her will, they’d both have an equal share of her estate. 

Imagine her daughter’s surprise to learn that not only did the son need to pay tax on the RRSP earnings, but it was going to come out of the estate – ie. her share. Ms. Abernathy was long gone, but suddenly hostility arose as her son and daughter fought for years over what was supposed to happen and who she loved more. And here, she thought she was being fair!

At the End of the Day

Estate planning in BC, as anywhere else, can be a tricky endeavor, fraught with potential pitfalls. But fear not, you can avoid these comedic mishaps with some careful planning, professional guidance, and a dash of common sense.

Ensure your will is up-to-date, document loans meticulously, and be clear about your assets. Most importantly – speak to a lawyer! After all, you wouldn’t want your loved ones to inherit your collection of cryptic riddles instead of your wealth.

So, the next time you’re contemplating your estate planning, remember the lessons from our British Columbia blunders. Estate planning may be serious business, but there’s always room for a good chuckle – just not at your loved ones’ expense!

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Disclaimer: This blog post is for informational purposes only and should not be construed as financial or legal advice. Consult with qualified professionals to create a personalized estate plan suitable for your specific circumstances.

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