May 6, 2025
Estate planning is an essential step in ensuring that your assets are distributed according to your wishes after you pass away. However, many Ontarians make critical mistakes that can lead to will disputes, costly legal battles, and family conflicts. Here are ten common estate planning pitfalls and how to avoid them.
- Failing to Draft a Will
One of the biggest mistakes people make is not having a will at all. When a person dies intestate (without a will), Ontario’s Succession Law Reform Act dictates how their assets are distributed, which may not align with their wishes. Family members may also face delays, additional expenses, and potential conflicts. A properly drafted will ensures your estate is handled as you intend.
- DIY Wills and Ambiguous Language
Many people turn to DIY will kits or online templates to save money, but these documents can lead to significant legal complications. Ambiguous wording, lack of required formalities, and failure to consider contingencies can render a will partially or entirely invalid. Consulting an estate lawyer can help ensure that your will is legally sound and unambiguous.
- Not Updating Your Will Regularly
A will is not a one-time document; it should be reviewed and updated regularly, especially after major life events such as marriage, divorce, the birth of children, or acquiring significant assets. In Ontario, marriage no longer automatically revokes a prior will, and a divorce does not automatically update an existing will, though it defeats the gift to the ex-spouse, which may lead to unexpected consequences. Keeping your will current prevents unintended beneficiaries from inheriting your estate.
- Ignoring Probate and Estate Administration Issues
Probate is the legal process of validating a will, and many people overlook the associated costs and delays. Strategies such as naming beneficiaries on registered accounts (RRSPs, TFSAs, life insurance policies) and setting up joint ownership can help minimize probate fees. However, improper use of these strategies can lead to unintended tax consequences or disputes, so professional advice is recommended.
- Overlooking Executor Responsibilities
Choosing the right executor is crucial, as they will be responsible for administering your estate. Many people appoint a family member without considering their ability to handle complex financial and legal matters. Executors should be trustworthy, organized, and willing to take on the responsibility. In some cases, appointing a professional executor, such as a lawyer or trust company, may be a better option.
- Unequal or Unexpected Asset Distribution
If beneficiaries receive unequal shares of an estate without a clear explanation, it can lead to family conflicts and legal disputes. This is particularly common in blended families or cases where certain children are left out of a will. If unequal distribution is necessary, including a letter of explanation or discussing your intentions with family members in advance can help prevent disputes.
- Failing to Plan for Incapacity
Estate planning is not just about distributing assets after death; it also includes planning for incapacity. Powers of attorney for property and personal care allow trusted individuals to manage finances and make medical decisions if you become unable to do so. Without these documents, your loved ones may face a lengthy and expensive court process to gain authority over your affairs.
- Tax Implications and Poor Estate Planning Strategies
Failing to consider tax consequences can significantly reduce the value of your estate. Common mistakes include:
- Not structuring gifts or inheritances tax-efficiently.
- Ignoring capital gains tax on investments or properties.
- Improperly designating beneficiaries on registered accounts. Consulting an estate lawyer or financial advisor can help minimize tax burdens and maximize inheritances.
- Not Considering Charitable Bequests
Many people wish to leave part of their estate to charity but fail to structure these bequests properly. By setting up a charitable gift in a tax-efficient manner, you can reduce estate taxes while supporting causes important to you.
- Neglecting Digital Assets
In today’s digital world, estate plans should include provisions for online accounts, digital currency, and social media. Without clear instructions, accessing these assets can be difficult for your loved ones. A digital estate plan should outline how these assets should be managed or transferred.
Takeaways
- Avoiding these estate planning pitfalls can help ensure a smooth transition of your assets to your beneficiaries; and
- minimize family disputes.
- Consulting an experienced estate lawyer is the best way to create a comprehensive plan that meets legal requirements and reflects your wishes.
- Taking proactive steps today can save your loved ones unnecessary stress and conflict and expense in the future.
What Weilers LLP can do to help you.
Our skilled estate planning lawyers will discuss your situation, and craft a will and powers of attorney in language that reflects your goals and provides for your desires. We will help you avoid these common pitfalls, and others which might be particular to your circumstances, all at a reasonable cost. This will probably save you (or your estate) money in the long run.
Give us a call and see if we are the right lawyers for you.