The 50 Biggest Estate Planning Mistakes...and How to Avoid Them

EVERY BOOK ON ESTATE PLANNING reminds us that the impending arrival of a new baby is a VERY IMPORTANT LIFE EVENT requiring a first or updated will. While that advice is sure true, the mistake we will discuss in this chapter is letting that flush of “estate-planning enthusiasm” fade over the years.

It does seem that people are most eager about will planning when the first child is on the way (oh yes, and on the eve of the skydiving adventure bought at a silent auction!). Maybe it is the excitement of being first-time parents that explains this burst of enthusiasm, but every estate lawyer is familiar with the panicked calls received shortly before the due date: “We need a will!”

Just as we all have hundreds of photos of our first child and then merely dozens of those that follow, parents’ enthusiasm for updating their wills to accommodate changes in the family seems to wane over the years.

We were reminded of this when reviewing the comments from one of the lawyers who shared her thoughts for the book. She noted that she’d recently worked on an estate where the last will had been prepared when the deceased woman was married with several children. She later divorced and then had children in two other relationships but never remarried. When she died, her one and only will from her marriage was still valid because she lived in a province where a will is not revoked by divorce. Since she had never remarried, her first will had also never been revoked by marriage (as mentioned in Mistake #19). Furthermore, the deceased’s adult children were financially independent and, in the province in question, did not have a claim against their mother’s estate.

Referring to the deceased’s children from her later relationships, our colleague succinctly said, “they were just out of luck.” If these younger children had been under the age of majority when their mother died, they could have made a claim for support from her estate, but as they had just become of legal age, even that route was closed to them except for a possible claim for post-secondary education.

To complicate matters even further, you need to consider carefully how you define “children” in your life. Perhaps when you think about your children, in your mind, you are including your children’s spouses in that definition, possibly children of your spouse (stepchildren), perhaps godchildren. It can get very complicated and it is important to make your intentions crystal clear in your will.

An interesting court case from Alberta looked at the issue of what people mean when they say “my children.” The deceased in his will had left a small cash gift to each of “my children” followed by a list of nine people: two of his children, six stepchildren (none of them legally adopted by him) and one spouse of a child.

The residue, or remaining net worth, of the estate was then left in a lifetime trust for the deceased’s third child, a disabled adult who was dependent on the deceased. Upon the disabled child’s death, the remaining amount in the trust was to be divided among “my children,” full stop. The question for the court to decide was whether the deceased intended “my children” in that part of the will to mean his legal children (two people) or the nine people he had described as “my children” in the cash gift paragraph of his will.

The court decided that the deceased had defined the people he considered as his children through the wording he used in the cash gift: a mixture of children, stepchildren and a child’s spouse. The court noted, “The fact that his definition does not accord with a strict legal definition is of no relevance. It is his intention which is relevant.”

Although the case is a good illustration of the importance of clearly defining who you mean when you refer to “children,” don’t infer from it that you can just include or exclude freely as you see fit. As you work through your estate planning with an experienced estate lawyer, you will be guided on how to successfully achieve your intentions. The personal relationship you have with the children in your life, broadly defined, may only be one relevant factor. Other factors that your lawyer will want to discuss with you include the financial relationship you have with any of them (i.e., are any dependent?) and the legislation in your province that pertains to providing for children after death.

So, review your will as the “children” in your life are born, grow up and marry, and not only from the simple perspective of whether they should be a beneficiary or not. Perhaps one adult child has developed skills that would make her a wise choice for your executor. Or maybe another adult child would be better served if you left his share in a trust rather than leaving it all to him outright. Your children’s growth and maturity into adulthood and the people that they include in their lives are just two important examples of factors you need to consider as part of your estate planning.

As important as it feels to get a will in place that makes reference to your newborn son or daughter, don’t stop there; often the more interesting and important planning for your children comes later as they grow up and mature, displaying new skills and attributes and bringing new people into their lives.

points to take away