The biggest problem in estate planning and retirement planning is procrastination. Poor financial planning is waking up at 64 and realizing you don't have an income on your next birthday.
In our practice, we have identified two species of procrastinators. In the first are the people who are completely oblivious to the benefits of a Will, power of attorney, or living Will. They appear to be firmly convinced they will never die or be seriously ill.
There is really no reason for the first type of procrastinator in our society. Most people can read and write and information is readily obtainable through free seminars, Internet access, and public libraries. People can obtain estate-planning information to determine what happens if they don't have a Will or a power of attorney and whether they need these documents. Many lawyers will answer basic questions over the phone free of charge.
If you really don't want to bother with a Will or a power of attorney, you owe it to yourself and your family to at least find out what happens if you don't have these documents. (Read more about Why You Need an Estate Plan and Dying Without a Will.) This knowledge might shock you into doing something. At the very least, you can take comfort in knowing what will happen. The government has rules for who gets what and who administers your estate. These might be fine for you.
The reason the first type of procrastinator gets away with procrastinating is that if nothing is done, he or she doesn't personally have to suffer the consequences. It is the family that has to deal with the loose ends. Unfortunately, dealing with these loose ends can cause great anguish and expense.
In the second species of procrastinator are the people who know a Will or a power of attorney is needed but just never get around to it. They don't get around to it because it takes time, it might mean having to deal with some hard questions, there might be no appropriate guardian or executor to appoint, and, of course, it costs money. But you might be surprised—even people with significant wealth perpetually procrastinate when it comes time to actually implementing an estate plan.
The second type of procrastinator is filled with good intentions, but the ultimate result is the same as the first type, that is, lack of implementation of an estate plan.
Examples of What Could Happen
- A young couple couldn't decide whom to choose to be the guardian of their children so they never got around to signing their Wills. One of them died in the meantime. They would have been better to have Wills without naming a guardian. A guardian could have been added later by an inexpensive document called a codicil. Even if you don't have all your ducks in a row, you should at least do the best job you can with the information or personnel at hand.
- We have seen a few cases where people who were in the early stages of Alzheimer disease put off dealing with the appropriate papers. The big problem here is that most senility disorders come on gradually but relentlessly, so that there will come a time when it is, in fact, too late to sign the papers. These cases are difficult for us to fathom; most people delay because there is only a chance that the documents will be used, whereas with a diagnosis of Alzheimer's the only issue is when the documents will be needed. If a power of attorney was necessary but not in place, then a family has to apply to a court to get the patient declared incapable. This is time consuming and expensive. If no family member is prepared to do this, the Public Trustee would have to do the job.
- Not having appropriate documentation is especially a problem for people who have been divorced or remarried, or live common law and either have second families or have stepchildren. Anybody who is in this situation needs to do some careful planning so that disagreements are minimized between surviving second spouses, natural children, and stepchildren. Stepchildren don't likely have a claim on a stepparent's estate in the absence of a Will naming them. Did you know that without a Will your ex-spouse could inherit your estate if you and your children die in a common accident?
Review your documentation on a regular basis. (Read more about Reviewing Your Will.) Estate plans need to be amended over time. Births, adoptions, deaths, financial gains, financial losses, asset acquisitions, marriages, separations, divorces, cohabitation, and same-sex relationships all should trigger a review of your estate plan. Don't forget that your estate plan also consists of insurance, RRSP designations (is your ex-spouse still named beneficiary?), and joint property ownership. All need to be reviewed as part of one package. A change of one factor could trigger a change in another.
So don't delay; start today to implement an estate plan.
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